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1)
If the USD were to depreciate, then all else held constant
a)
the US economy would experience deflation
b)
the US economy would experience an acceleration in inflation
c)
the US economy would experience a deceleration in inflation
d)
the US inflation rate would remain unaffected
2)
In the second half of the 1990’s the US economy experienced very low
inflation rates. This was in part due to
a)
a depreciating US dollar
b)
increasing property values
c)
stock market boom
d)
influx of foreign investment and dollar appreciation
3)
Which of the following statements is incorrect?
a)
the US economy is an example of a mixed economic system where
socialism is mixed with capitalism
b)
the economies of Western Europe tend to have more elements of
socialism than the economy of the US
c)
the economies of Eastern Europe have undergone a transition from a
command economy to a market economy in the 1990’s
d)
none of the above statements are incorrect
4)
If a nation has been a net recipient of foreign investment in the past then it is
more likely to have
a)
a GDP that exceeds its GNP
b)
a GNP that exceeds its GDP
c)
a GNP that is equal to its GDP
d)
none of the above
For the following transactions state whether the transaction will be reflected in the GDP
(A), the GNP (B), in both, the GDP and GNP (C), is part of neither the GDP or the GNP
computation (D)
5)
6)
7)
8)
9)
Purchase of stock by an investor
Purchase of a new car, manufactured in the US by a Japanese owned firm
(like Nissan) by a US consumer
Purchase of a T-shirt made in China by a US consumer
Dividend payment received by a US shareholder from a Russian firm
Purchase of Good Year tires (made in the US) by Ford Inc.
For each of the following state whether it is expected to cause (all else held constant): 1)
an appreciation of the USD (A); 2) depreciation of the USD (B); 3) no effect on the value
of the USD (C)
10)
11)
an increase in the US trade deficit
an increase in spending my US consumers/firms on foreign goods
12)
13)
14)
investment by foreigners into the US financial markets
purchases by US mutual funds of foreign government bonds
an increase in the US inflation rate (above the rate of inflation in other major
economies)
15)
It is an established fact that in developed economies, such as that of the US,
more of domestic activities (household activities, such as cooking,
housework…) are being observed in the market place, and hence are being
accounted for in the GDP. This is due to …
a)
the fact that in developed economies labor force participation rates
tend to be lower
b)
the fact that in developed economies the opportunity cost of time tends
to be higher
c)
none of the above
16)
If you look around yourself right now you will notice that you are surrounded
by relatively young people, of course excluding the instructor. Is this purely
coincidental or may this be a characteristic of human behavior that can be
explained by economic theory? From the list of the arguments listed below
select a possible explanation to this observation.
a)
the explicit costs of attending the class are higher for older students, as
the wage rate tends to increase with age, due to experience
b)
the expected benefit from education declines with age. After all, the
older an individual gets the fewer years that individual is expected to
spend in the labor force
c)
with age comes wisdom, and hence older workers do not require an
education
d)
choices A and B are both correct
e)
None of the above
17)
Which of the following statements is incorrect?
a)
currency depreciation will lead to inflationary pressure
b)
if an economy experiences inflation above the level of inflation in the
economies of its trading partners, its currency should depreciate
c)
inflation will cause an increase in nominal interest rates
d)
unanticipated inflation (rise in inflation) can cause redistribution of
wealth from borrowers to lenders
e)
none of the above
18)
In order to adequately compare the standards of living across countries one
must compare the following measure, (converted into the same currency for
comparison purposes):
a)
GNP per capita levels
b)
Real GNP per capita levels
c)
GNP per capita based on purchasing price parity
d)
GDP per capita
19)
During the 1990’s the US dollar was appreciating. Two important effects were
observed: one, there was a continuous growing trade deficit, and two, there
was a substantial inflow of foreign investment into the US. In the context of
demand supply framework we can explain this behavior of the dollar as
follows:
a)
both, the demand and the supply of the US dollar grew, but the growth
in demand outpaced the growth in supply
b)
both, the demand and the supply of the US dollar grew, but the growth
in supply outpaced the growth in demand
c)
the demand for the US dollar grew while the supply of the US dollar
declined
d)
the demand for the US dollar decrease, while the supply was on the
rise
e)
both, the demand and the supply of the US dollar remained unchanged
20)
In order to be counted as unemployed in the US one must meet the following:
a)
be registered with a state labor department
b)
collect unemployment compensation
c)
simply have no job and be actively looking for work
d)
none of the above
21)
Recently the price of gasoline has increased substantially. Yet, the traffic on
Atlanta roads has not eased at all. Based on this observation you could argue
that the demand for gasoline is
a)
vertical
b)
horizontal
c)
upward sloped
True/False statements:
22)
23)
24)
25)
Macroeconomics concentrates its analysis on the economy as a whole
If the US economy were to experience a recession, then that recession would
spread into the economy of Mexico, a major US trading partner, since the US
consumers will by fewer normal goods, including goods manufactured in
Mexico, and hence Mexican exports to the US will decline.
Recession is an economy wide problem, and hence all businesses will be
adversely affected by a recession.
Immigration of low-skilled labor can lead to a widening gap in income
inequality