Download Econ 203 Test 1

Econ 203 Test 1 (Make sure to put your name on the test and on your scantron; 2 pts off if not)
1. Currently, nominal GDP in the U.S. is closest to which of the following ranges?
a. $19-20 trillion
b. $14-15 trillion
c. $8-9 trillion
d. none of the above
2. Economists do not usually support “protectionist” policies. Such policies are intended to
a. place restrictions on foreign imported products
b. keep business in some states free from competition from businesses in other states
c. enhance food and product safety for consumers
d. none of the above
3. Which of the following pairs is a good example of “creative destruction”?
a. jobs for blacksmiths and jobs for automobile mechanics
b. jobs for fruit pickers and jobs for supermarket stockers
c. jobs for physicians and jobs for nurses
d. all of the above
4. Currently, the unemployment rate in the U.S. is about
a. 5.6%
b. 7.4%
c. 9.7%
d. 13.2%
5. The CPI uses a group of goods and services to
a. calculate the rate at which U.S. goods/services translate into foreign goods/services
b. calculate the total value of goods and services traded in the U.S.
c. calculate the growth rate of GDP
d. none of the above
6. In the U.S., the process of creative destruction has led to what kinds of general shifts in the types of jobs?
a. from agricultural to non-agricultural
b. from heavy manufacturing to professional, technical, and artistic
c. from transportation with horses and steam to autos and air
d. all of the above
7. In the St. Louis Fed article, William Poole suggests that the gap between economists’ views of free trade and noneconomists views are, in part, shaped by
a. strong opposition from business and labor unions where jobs will be lost
b. from well-informed national media coverage of the topic
c. the fact that the new jobs created tend to be very focused in a particular area
d. all of the above
8. The price of West Texas Intermediate Crude oil is currently at about what level?
a. $30 per barrel
b. $50 per barrel
c. $70 per barrel
d. $100 per barrel
9. The Washington apple, Florida orange example illustrated the principle that
a. trade benefits business while making consumers worse off
b. the loss of jobs from trade more than offsets any gains to production/consumption
c. specialization and trade can increase total production and consumption
d. none of the above
10. What is a source of comparative advantage for a region?
a. Geographic location
b. Human Capital (knowledge; skills)
c. Labor
d. All of the Above
11. The 1997 film Titanic earned about $600 million in U.S. box office revenues. The CPI in 1997 was 160. It
2000 the CPI was 180. In 2009 the CPI is 215. Compute the amount the film earned in 2000 constant dollars:
a. $806 million b. $533 million
c. $675 million d. none of the above
12. Suppose a traveler to Europe wanted to convert $1000 into Euros. The current exchange rates of dollars and
Euros are: 1.5 dollars per Euro and 0.67 Euros per dollar. Given these exchange rates, the $1000 would be worth
a. €1500
b. €670
c. €2230
d. €440
13. Purchasing power parity refers to
a. buying a good at a lower price and reselling at a higher price
b. when the same dollar amount of money is able to purchase equal amounts of goods/services in two different
countries
c. when exchange rates are equal in two countries
d. none of the above
14. Suppose that a major drought hits corn and wheat growing regions in the U.S. What would be the main effects
in terms of Supply-Demand and prices for corn- and wheat-related products to be?
a. supply would decrease and price would decrease
b. supply would increase and price would increase
c. supply would decrease and price would increase
d. none of the above
15. In the preceding situation, what signals do market prices send or incentives provided?
a. producers have an incentive to cut back production
b. consumers have an incentive to be more careful in their purchases
c. consumers and producers receive the message that the good is now more plentiful
d. all of the above
16. What is true about Big Macs and purchasing power parity?
a. Big Macs are similar to gold in displaying PPP
b. Big Macs tend to be less expensive on a dollar for dollar basis in poorer nations
c. Among wealthier nations, PPP holds nearly perfectly for Big Macs
d. none of the above
17. Considering PPP data on Big Macs within a country,
a. Big Mac prices tend to be closer together within a state than within a city
b. Big Mac prices tend to be closer together within a state than within a country
c. Big Mac prices tend to be closer together within a country than within a city
d. none of the above
18. Comparative advantage
a. is based on who can produce more of a good or service
b. tends to shift over time as the sources of it change
c. is important for trade between states but not between nations
d. all of the above
19. Although “money can’t buy happiness” one reason to think that happiness measures and GDP might be related is
that (this questions was messed up – put A for answer)
a. happiness and GDP are not closely correlated, possibly because of rising expectations
b. GDP is closely correlated only with more goods, not with other outcomes that people care about such as life
expectancy
c. GDP and happiness measures tend to be very closely correlated
d. GDP is intended as a measure of happiness
20. Constant dollar or “real” GDP
a. is a different method of measuring the average price level than the CPI
b. is always higher than nominal GDP
c. Measures expenditures while holding the purchasing power of the dollar constant
d. all of the above
21. Put “A” for your answer
Correct Answers: 1b, 2a, 3a, 4c, 5d, 6d, 7a, 8c, 9c, 10d, 11c, 12b, 13b, 14c, 15b, 16b, 17b, 17b, 19a, 20c