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Western University
Economics 1022A/B
Jeannie Gillmore

▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯ ▯▯▯▯▯ ▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯ ▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯ ▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯ ▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯▯ ▯▯▯▯▯▯▯▯▯ Use the table below to answer the following question. ▯▯▯▯▯▯▯ Item Millions of dollars Wages paid to labour 800,000 Consumption expenditure 650,000 Taxes paid on wages 200,000 Government payments to support unemployed, sick, & aged 50,000 Firms' profits 200,000 Investment 250,000 Taxes paid on profits 50,000 Government expenditure on goods and service 200,000 Exports 250,000 Saving 200,000 Imports 300,000 1) Refer to Table 1. Consider the economy represented in the table. GDP in this economy, in millions of dollars, is A) $1,150,000 B) $1,050,000. C) $850,000. D) $1,350,000. E) none of the above. 2) The sum of wages, salaries and supplementary labour income, and other factor incomes is A) net domestic income at factor cost. B) net domestic product. C) total output of the economy. D) gross domestic product. E) gross domestic income. 1 3) In any year, real GDP A) increases if potential GDP increases, and decreases if potential GDP decreases. B) must always be less than potential GDP. C) will always be greater than potential GDP because of the tendency of nations to incur inflation. D) always equals potential GDP. E) might be greater than, less than, or equal to potential GDP. 4) In a country with a working-age population of 20 million, 13 million are employed, 1.5 million are unemployed, and 1 million of the employed are working part-time, half of whom wish to work full-time. The size of the labour force is A) 15.5 million. B) 20 million. C) 14.5 million. D) 13 million. E) 11.5 million. 5) Which of the following pieces of information do you need to calculate the labour force participation rate? I. the number of employed persons II. the number of unemployed persons III. the population IV.the working age population A) I and III B) I, II and III C) I, II and IV D) I and II E) all of the above 2 Use the table below to answer the following question. ▯▯▯▯▯▯▯ Suppose a simple economy produces three goods only. The price and output data for some selected years are shown below. Price Price Quantity Quantity (dollars) (dollars) (number) (number) 2002 2012 2002 2012 Pop 0.75 1.10 100 120 Crackers 1.25 2.10 300 280 Cucumbers 2.00 3.00 200 190 6) Refer to Table 2. The reference base period is 2012. The CPI in 2012 is A) 153. B) 100. C) 64. D) 129. E) 157. 7) If real GDP per person is growing at 4 percent per year, it will double in A) 4 years. B) 25 years. C) 17.5 years. D) 56 years. E) 8 years. 3 Use the figure below to answer the following question. ▯▯▯▯▯▯▯▯ 8) Refer to Figure 1. As a result of the rightward shift in the demand curve for labour fro0 to LD 1 the equilibrium level of employment ________, potential GDP ________, and potential GDP per hour of labour ________. A) decreases; decreases; decreases B) increases; increases; increases C) increases; decreases; increases D) decreases; increases; decreases E) increases; increases; decreases 9) An assumption of the new growth theory is that A) the growth rate of labour productivity depends on people's ability to innovate. B) all technological advances are the result of chance. C) people earn a subsistence real wage in the long run. D) the marginal product of all types of capital increases as more capital is accumulated. E) technological advances encourage international trade. 4 Refer to the figure below to answer the following question. ▯▯▯▯▯▯▯▯ 10) R
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