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ECON 1010 Study Guide - Midterm Guide: Aggregate Supply, Gross Domestic Product, Allocative EfficiencyExam


Department
Economics
Course Code
ECON 1010
Professor
All
Study Guide
Midterm

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Exam
Name___________________________________
Mid Term Test Macro Economics 1010 C Summer 2012 Version 1
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1)
A medical clinic has 10 workers. Each worker can produce a maximum of either 2 units of medical
services or 5 units of secretarial services a day. One day, the firm decides it would like to produce
10 units of medical services and 30 units of secretarial services. This output level is
1)
A)
costless.
B)
unattainable.
C)
efficient.
D)
inefficient.
E)
is attainable if the firm reduces the number of its workers.
2)
The cost of the CPI basket in base-period prices is $200 and the cost of the CPI basket in
current-period prices is $450. The CPI in the current year is
2)
A)
250.
B)
44.44.
C)
450.
D)
300.
E)
225.
3)
Suppose the economy of Econoworld produces only two goods, kayaks and birdseed. In one year
20 kayaks are produced and sold for $1,000 each and 10 bags of birdseed are produced and sold for
$30 each. The value of nominal GDP for this year is
3)
A)
$23,000.
B)
$20,300.
C)
$20,000.
D)
$300.
E)
20 kayaks plus 10 bags of birdseed.
4)
Which of the following situations illustrates how fiscal policy can influence aggregate demand?
4)
A)
The exchange rate value of the Canadian dollar rises. As a result, people living near the
US-Canada border increase their imports of goods and net exports decrease.
B)
The Bank of Canada raises interest rates so people plan to buy less consumer durables. As a
result, the aggregate demand curve shifts leftward.
C)
Investors, anticipating an erosion of financial wealth due to inflation, decide to save more. As
a result, aggregate demand decreases.
D)
The government reduces the goods and services tax. As a result, consumption expenditure
increases and aggregate demand increases.
E)
Both A and C are examples of fiscal policy.
5)
If real GDP is less than potential GDP, then the economy is
5)
A)
in a full-employment equilibrium.
B)
not in short-run equilibrium.
C)
in an above full-employment equilibrium.
D)
in a below full-employment equilibrium.
E)
in long-run equilibrium.
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6)
The income approach to measuring GDP is derived by adding together
6)
A)
wages, salaries and supplementary labour income, corporate profits, interest and
miscellaneous investment income, farmers' income, and income of non-farm unincorporated
businesses, plus indirect taxes less subsidies, plus depreciation.
B)
the total expenditures of consumers, investors, net exporters, and purchases of all levels of
government.
C)
wages, salaries and supplementary labour income, corporate profits, interest and
miscellaneous investment income, farmers' income, subsidies paid by the government,
indirect taxes paid, and income of non-farm unincorporated businesses.
D)
the value added of each firm in the economy.
E)
the value added of each firm in the economy, indirect business taxes, depreciation, and by
subtracting subsidies paid by the government.
Use the figure below to answer the following questions.
Figure 20.1.1
7)
Refer to Figure 20.1.1, which shows the circular flow of expenditure and income for Venus. During
2008, A was $100, B was $50, C was $30 and D was $10. How much is net exports?
7)
A)
$30.
B)
$25.
C)
$10.
D)
$50.
E)
None of the above.
8)
Some producers are chatting over a beer. Which one of the following quotations refers to a leftward
shift of the supply curve?
8)
A)
"Wage increases have forced us to raise our prices."
B)
"Our new, sophisticated equipment will enable us to undercut our competitors."
C)
"Raw material prices have sky-rocketed; we will have to pass the cost on to our customers."
D)
"We anticipate a big increase in demand. Our product price should rise, so we are planning
for an increase in output."
E)
Both A and C.
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Use the figure below to answer the following questions.
Figure 26.3.1
9)
Refer to Figure 26.3.1. As Econoworld automatically adjusts to long-run equilibrium, the
9)
A)
SAS curve shifts leftward.
B)
LAS curve shifts leftward.
C)
AD curve shifts rightward.
D)
SAS curve shifts rightward.
E)
AD curve shifts leftward.
10)
Refer to Figure 26.3.1. Short-run macroeconomic equilibrium real GDP in Econoworld is
10)
A)
$480 billion.
B)
$400 billion.
C)
$520 billion.
D)
$360 billion.
E)
$440 billion.
11)
If the labor force participation rate is rising and the working-age population is not changing, then
the
11)
A)
number of unemployed people is rising and the size of the labor force is falling.
B)
number of unemployed people is falling and the size of the labor force is rising.
C)
size of the labor force is rising.
D)
number of employed people must be increasing.
E)
size of the labor force is falling.
12)
Which one of the following people would be counted as unemployed in Canada?
12)
A)
Rebekah is a recent graduate looking for work.
B)
Ron has quit looking because he believes that there is no work available for him.
C)
Ruth is a 14-year-old student and has been looking for an after-school job every day for the
past month.
D)
Simone is currently working but expects to be laid off by the end of the month, before next
month's survey can be completed.
E)
Sarah has been looking for a job but is taking a month-long break from the job-seeking effort
due to her lack of skills.
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