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Midterm

Economics 1022A/B Study Guide - Midterm Guide: Government Budget Balance, Loanable Funds, Nominal Interest Rate


Department
Economics
Course Code
ECON 1022A/B
Professor
Jeannie Gillmore
Study Guide
Midterm

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Use the table below to answer the following question.
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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.
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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
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Use the table below to answer the following question.
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Suppose a simple economy produces three goods only.
The price and output data for some selected years are shown below.
Price
(dollars)
Price
(dollars)
Quantity
(number)
Quantity
(number)
2002 2012 2002 2012
Pop
Crackers
Cucumbers
0.75
1.25
2.00
1.10
2.10
3.00
100
300
200
120
280
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.
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