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ECON 1010 Study Guide - Midterm Guide: Potential Output, Producer Price Index, Output GapExam


Department
Economics
Course Code
ECON 1010
Professor
All
Study Guide
Midterm

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NAME:______________________________DATE:_____________
ECON 1010: PRINCIPLES OF
MACROECONOMICS
MIDTERM EXAM II
SUMMER 2008
MULTIPLE CHOICE QUESTIONS
FORM A

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Page|2
Answer Key
1. B
2. A
3. D
4. C
5. D
6. C
7. B
8. D
9. C
10. C
11. B
12. D
13. A
14. D
15. B
16. A
17. B
18. A
19. C
20. B
21. C
22. C
23. C
24. B
25. A
26. B
27. B
28. D
29. D
30. C
31. B
32. D
33. C
34. A
35. B
36. B
37. D
38. B
39. C
40. B

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Page|3
Instructions:
Please carefully read each question (underline key points if you have to) then select the
best/correct answer. Fill in the bubble sheet neatly so that the grading machine can
properly grade your answers.
1. In the “paradox of thrift”:
A) profligate behavior during economic tough times has large negative consequences
for society.
B) increased saving by individuals increases their chances of becoming unemployed.
C) firms that are pessimistic about the future lay off the most saving-conscientious
workers.
D) when families and business are feeling pessimistic about the future, they spend
more today.
2. Monetary policy attempts to stabilize the economy during the business cycle through:
A) changes in the quantity of money or the interest rate.
B) changes in tax policy or government spending.
C) discretionary regulation of profits and wages.
D) changes in the inflation rate.
Use the following to answer question 3:
Table: Unemployment and Employment Data
Unemployment and Employment Data
Population 170
Employed 95
Unemployed and looking for work 5
Discouraged workers 3
Retired 60
All figures are in the millions
3. (Table: Unemployment and Employment Data) According to the accompanying table,
the unemployment rate for this economy is:
A) 4.8%.
B) 5.3%.
C) 2.9%.
D) 5.0%.
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