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Macro Economics 1010.N Mid Term Test Winter 2012---TEST B

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

1)

The fixed basket of Econoland consists of 10 units of A, 20 units of B, and 30 units of C. Current

prices are $1 per unit of A, $2 per unit of B, and $3 per unit of C. Base year prices are $1 for each

unit of A,B, and C. What is the CPI in the current year?

1)

A)

233

B)

43

C)

140

D)

430

E)

100

2)

A recession is a period with

2)

A)

positive growth rate in real GDP that lasts at least two quarters.

B)

negative growth rate in real GDP that lasts at least two quarters.

C)

negative growth rate in real GDP that lasts at least one quarter.

D)

a slowdown in real GDP growth but not necessarily negative real GDP growth.

E)

positive growth rate in real GDP that lasts at least one quarter.

Use the figure below to answer the following questions.

Figure 26.2.1

3)

Refer to Figure 26.2.1. Which graph illustrates what happens when government expenditure

decreases?

3)

A)

(a)

B)

(b)

C)

(c)

D)

(d)

E)

(a) and (b)

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4)

If investment increases by $200, and as a result income increases by $800, then the

4)

A)

multiplier is 3.

B)

slope of the AE curve is 1/4.

C)

slope of the AE curve is 0.75.

D)

multiplier is 1/4.

E)

none of the above.

5)

The aggregate expenditure curve and the aggregate demand curve are

5)

A)

linked because if the price level rises, the aggregate expenditure curve shifts downward, and

there is a movement down along the aggregate demand curve.

B)

the same curve, just with different names.

C)

not related at all.

D)

linked because if the price level rises, the aggregate expenditure curve shifts downward, and

the aggregate demand curve shifts leftward.

E)

linked because if the price level rises, the aggregate expenditure curve shifts downward, and

there is a movement up along the aggregate demand curve.

Use the figure below to answer the following questions.

Figure 20.1.1

6)

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 aggregate expenditure?

6)

A)

$90.

B)

$50.

C)

$75.

D)

$100.

E)

None of the above.

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7)

If the labor force participation rate is rising and the working-age population is not changing, then

the

7)

A)

size of the labor force is falling.

B)

number of unemployed people is falling and the size of the labor force is rising.

C)

number of unemployed people is rising and the size of the labor force is falling.

D)

number of employed people must be increasing.

E)

size of the labor force is rising.

Use the table below to answer the following question.

Table 27.1.1

The following table shows the relationship between consumption

expenditure (C) and disposable income (YD) for a hypothetical economy.

YD (dollars) C(dollars)

100

200

300

400

500

600

225

300

375

450

525

600

8)

Refer to Table 27.1.1. The marginal propensity to consume is

8)

A)

equal to 1 when YD equals $600.

B)

0.25.

C)

1.33.

D)

increasing as YD increases.

E)

0.75.

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