ECON 104 Macroeconomic Analysis Exam

Exam 2 – PERFECT SCORE (100%)

• Points 40

• Questions 40

• Time Limit 75 Minutes

Instructions

Rules for online exam (Using canvas)

1. Students are expected to complete the exam in one session.
2. Only one attempt is allowed.
3. Format: 40 multiple choice questions.
4. MULTIPLE CHOICE.  Choose the one alternative that best completes the statement or answers the question.
5. Allocated time is 75 minutes. Plan your time accordingly.
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9. Technical difficulties will NOT be considered as legitimate excuse for missing any exams administered online.
10. At the end of the 75-minutes period, the exam will automatically log-off.

Attempt History

 Correct answers are hidden.

Score for this quiz: 40 out of 40

Question 1

1 / 1 pts

Macroeconomists study

the decisions of individual households and firms.

the interaction between households and firms.

economy-wide phenomena.

regulations imposed on firms and unions.

Question 2

1 / 1 pts

Gross domestic product measures

income and expenditures.

income but not expenditures.

expenditures but not income.

neither income nor expenditures.

Question 3

1 / 1 pts

GDP is defined as the

value of all goods and services produced within a country in a given period of time.

value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.

value of all final goods and services produced within a country in a given period of time.

value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.

Question 4

1 / 1 pts

The inflation rate you are likely to hear on the nightly news is calculated from

the GDP deflator.

the CPI.

the Dow Jones Industrial Average.

the unemployment rate.

Question 5

1 / 1 pts

Which of the following agencies calculates the CPI?

the National Price Board

the Department Of Weight and Measurements

the Bureau of Labor Statistics

the Congressional Budget Office

Question 6

1 / 1 pts

From 2013 to 2014, the CPI for medical care increased from 150 to 159. What was the inflation rate for medical care?

5.7 percent

6.0 percent

9.0 percent

59.0 percent

Question 7

1 / 1 pts

Table 24-2

The table below pertains to Pieway, an economy in which the typical consumer’s basket consists of 15 bushels of peaches and 10 bushels of pecans.

Refer to Table 24-2. The cost of the basket in 2012 was

$200.

$225.

$235.

$212.50.

Question 8

1 / 1 pts

An important difference between the GDP deflator and the consumer price index is that

the GDP deflator reflects the prices of goods and services bought by producers, whereas the consumer price index reflects the prices of goods and services bought by consumers.

the GDP deflator reflects the prices of all final goods and services produced domestically, whereas the consumer price index reflects the prices of goods and services bought by consumers.

the GDP deflator reflects the prices of all final goods and services produced by a nation’s citizens, whereas the consumer price index reflects the prices of all final goods and services bought by consumers.

the GDP deflator reflects the prices of all final goods and services bought by producers and consumers, whereas the consumer price index reflects the prices of all final goods and services bought by consumers.

Question 9

1 / 1 pts

The introduction of the video cassette recorder in the 1970s exemplified a problem in measuring the cost of living; that problem is the problem of

substitution bias.

product-improvement bias.

introduction of new goods.

unmeasured quality change.

Question 10

1 / 1 pts

If the nominal interest rate is 8 percent and the rate of inflation is 3 percent, then the real interest rate is

-5 percent.

1.67 percent.

5 percent.

11 percent.

Question 11

1 / 1 pts

If the CPI was 127 in 1972 and is 324 today, then $10 in 1972 purchased the same amount of goods and services as

$3.92 purchases today.

$25.51 purchases today.

$207.00 purchases today.

$324.00 purchases today.

Question 12

1 / 1 pts

A COLA automatically raises the wage when

GDP increases.

taxes increase.

the consumer price index increases.

the producer price index increases.

Question 13

1 / 1 pts

A closed economy

does not trade with other economies.

is centrally-planned.

does not allow financial intermediation.

All of the above are correct.

Question 14

1 / 1 pts

Consider the expressions T – G and Y – T – C. Which of the following statements is correct?

Each one of these is equal to national saving.

Each one of these is equal to public saving.

The first of these is private saving; the second one is public saving.

The first of these is public saving; the second one is private saving.

Question 15

1 / 1 pts

Suppose that in a closed economy GDP is equal to 15,000, government purchases are equal to 3,000, consumption equals 10,500, and taxes equal 3,500. What are private saving and public saving?

1,500 and -500, respectively

1,500 and 500, respectively

1,000 and -500, respectively

1,000 and 500, respectively

Question 16

1 / 1 pts

When the government has a budget surplus

it buys more of its bonds from the public than it sells to the public.

it spends more than it receives in tax revenue.

private saving is greater than zero.

exports are greater than imports.

Question 17

1 / 1 pts

An increase in the government’s budget deficit means

public saving is greater than $0 and increasing.

public saving is greater than $0 and decreasing.

public saving is less than $0 and increasing.

public saving is less than $0 and decreasing.

Question 18

1 / 1 pts

In the language of macroeconomics, investment refers to

saving.

the purchase of new capital.

the purchase of stocks, bonds, or mutual funds.

All of the above are correct.

Question 19

1 / 1 pts

Cyclical unemployment refers to

the portion of unemployment created by job search.

short-run fluctuations around the natural rate of unemployment.

changes in unemployment due to changes in the natural rate of unemployment.

the portion of unemployment created by wages set above the equilibrium level.

Question 20

1 / 1 pts

Unemployment data are collected

from unemployment insurance claims.

through a regular survey of about 60,000 households.

through a regular survey of about 200,000 firms.

All of the above are correct.

Question 21

1 / 1 pts

Who of the following is not included in the Bureau of Labor Statistics’ “employed” category?

those who worked in their own business

those who worked as unpaid workers in a family member’s business

those waiting to be recalled to a job from which they had been laid off

those who were temporarily absent from work because of vacation.

Question 22

1 / 1 pts

Jai Li just lost her job, and she has not yet started looking for a new one. The Bureau of Labor Statistics counts Jai Li as

unemployed and in the labor force.

unemployed but not in the labor force.

in the labor force but not unemployed.

neither in the labor force nor unemployed.

Question 23

1 / 1 pts

Table 28-2
Labor Data for Aridia

Refer to Table 28-2. The labor force of Aridia in 2010 was

1,400.

1,600.

1,800.

2,000.

Question 24

1 / 1 pts

Table 28-2
Labor Data for Aridia

Refer to Table 28-2. The unemployment rate of Aridia in 2010 was

10%.

12.5%.

14.3%.

80%.

Question 25

1 / 1 pts

The Bureau of Labor Statistics counts discouraged workers as

employed. Including them as employed makes the unemployment rate lower than otherwise.

unemployed. Including them as unemployed makes the unemployment rate higher than otherwise.

out of the labor force. If the were counted as unemployed the unemployment rate would be higher.

None of the above is correct.

Question 26

1 / 1 pts

Ariana is the CEO of a corporation that hires nonunion labor. According to the theory of efficiency wages, if she decides to pay her workers more than the competitive equilibrium wage, then

the profits of her firm might increase.

she will face a shortage of labor.

the turnover of her workers may increase.

None of the above is correct.

Question 27

1 / 1 pts

Suppose that roofers are not unionized. If roofers unionize, then the supply of labor in other sectors of the economy will

decrease, raising wages in industries that are not unionized.

decrease, reducing wages in industries that are not unionized.

increase, raising wages in industries that are not unionized.

increase, reducing wages in industries that are not unionized.

IncorrectQuestion 28

0 / 1 pts

If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied,

there is a surplus and the interest rate is above the equilibrium level.

there is a surplus and the interest rate is below the equilibrium level.

there is a shortage and the interest rate is above the equilibrium level.

there is a shortage and the interest rate is below the equilibrium level.

Question 29

1 / 1 pts

A larger budget surplus

raises the interest rate and investment.

reduces the interest rate and investment.

raises the interest rate and reduces investment.

reduces the interest rate and raises investment.

Question 30

1 / 1 pts

Suppose the U.S. offered a tax credit for firms that built new factories in the U.S. Then

the demand for loanable funds would shift rightward, initially creating a surplus of loanable funds at the original interest rate.

the demand for loanable funds would shift rightward, initially creating a shortage of loanable funds at the original interest rate.

the supply of loanable funds would shift rightward, initially creating a surplus of loanable funds at the original interest rate.

the supply of loanable funds would shift rightward, initially creating a shortage of loanable funds at the original interest rate.

Question 31

1 / 1 pts

If the demand for loanable funds shifts to the left, then the equilibrium interest rate

and quantity of loanable funds rises.

and quantity of loanable funds falls.

rises and the quantity of loanable funds falls.

falls and the quantity of loanable funds rises.

Question 32

1 / 1 pts

What would happen in the market for loanable funds if the government were to increase the tax on interest income?

Interest rates would rise.

Interest rates would be unaffected.

Interest rates would fall.

The effect on the interest rate is uncertain.

Question 33

1 / 1 pts

A decrease in the budget deficit

makes investment spending fall.

makes investment spending rise.

does not affect investment spending.

may increase, decrease, or not affect investment spending if private saving doesn’t change.

Question 34

1 / 1 pts

A bond is a

financial intermediary.

certificate of indebtedness.

certificate of partial ownership in an enterprise.

None of the above is correct.

Question 35

1 / 1 pts

In a small closed economy investment is $50 billion and private saving is $45 billion. What are public saving and national saving?

$5 billion and $45 billion

-$5 billion and $45 billion

$5 billion and $50 billion

-$5 billion and $50 billion

Question 36

1 / 1 pts

Scenario 26-1. Assume the following information for an imaginary, closed economy.

Refer to Scenario 26-1. This economy’s government is running a

budget surplus of $3,000.

budget surplus of $12,000.

budget deficit of $3,000.

budget deficit of $12,000.

Question 37

1 / 1 pts

The source of the supply of loanable funds

is saving and the source of demand for loanable funds is investment.

is investment and the source of demand for loanable funds is saving.

and the demand for loanable funds is saving.

and the demand for loanable funds is investment.

Question 38

1 / 1 pts

Table 23-5

A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown in the following table. The base year is 2017.

​Refer to Table 23-5. What was this country’s nominal GDP in 2016?

$9,500

$10,000

$10,200

$10,500

Question 39

1 / 1 pts

A recession has traditionally been defined as a period during which

nominal GDP declines for two consecutive quarters.

nominal GDP declines for four consecutive quarters.

real GDP declines for two consecutive quarters.

real GDP declines for four consecutive quarters.

Question 40

1 / 1 pts

Real GDP is the yearly production of final goods and services valued at

current prices.

constant prices.

expected future prices.

the ratio of current prices to constant prices.