Download Practice Midterm Economics 105

Questions from Chapters 19-21 that are illustrative of what may appear
on the Midterm
Economics 105
Spring 2002
Answer the following questions.
Each question is worth 1 point.
Q1 Macroeconomics studies
A) how an individual consumer deals with such problems as inflation and
unemployment.
B) large economic units such as the Government of Canada or Molson.
C) disaggregated data.
D) aggregated data.
E) government intervention in individual markets.
Q2
A)
B)
C)
D)
E)
Macroeconomics is LEAST concerned with the
changes in the price of a particular good in a specific market.
changes in the unemployment rate.
growth rate of the economy.
level of unemployment.
level of productivity.
Q3
A)
B)
C)
D)
E)
Real national income is also known as
nominal national income.
current-dollar national income.
constant-dollar national income.
net national income.
none of the above
Q4 A nation's real national income in a given year measures the
A) dollar income earned by the nation's producing sector.
B) value of national output produced by the economy, measured in
constant dollars.
C) level of national income that is subject to taxation by the federal
government.
D) market value of national output produced by the economy.
E) opportunity cost of the economy's national output.
Q5 A country with an actual GDP that is less than its potential GDP
will be
A) experiencing an inflationary boom.
B) operating at its full-employment level.
C) producing inside its production possibilities boundary.
D) producing beyond its production possibilities boundary.
E) suffering from shortages of necessary factors of production.
Q6 Suppose that in 1998, the "Big Three" automobile manufacturers
produced 2 million cars priced at $20,000 each, and, in 1999, they
produced 1 million cars priced at $40,000 each. Ceteris paribus, the
resulting effect on nominal national income is
A) a decrease because fewer cars were produced.
B) a decrease because the price of each car decreased.
C) an increase because the price of the cars produced has doubled.
D) no change.
E) insufficient information to know.
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Q7 The unemployment figures that are calculated by Statistics Canada
may underestimate the actual number of people who are involuntarily
unemployed in all of the following circumstances EXCEPT:
A) A pipefitter who has exhausted his unemployment insurance benefits
stops looking for full-time work and takes odd jobs in his
neighbourhood.
B) The staff at a supermarket have their work week reduced from 40
hours to 27 hours.
C) An elementary school teacher works as a substitute a few days per
week but would like a full-time position.
D) An auto worker is laid off due to a plant shut-down for an
indeterminate period of time.
Q8 All of the following statements about inflation are true EXCEPT:
A) a fully anticipated inflation has no real effects.
B) an unanticipated inflation benefits debtors.
C) inflation reduces the real value of fixed money incomes.
D) inflation reduces the real value of nominal debt.
E) the purchasing power of money is positively related to the price
level.
Q9
A)
B)
C)
D)
E)
Inflation
benefits creditors if it is unanticipated.
has no real effects if it is unanticipated.
increases the purchasing power of money.
reduces the real value of nominal debt.
reduces the real value of fixed money incomes.
Q10 From the 1930s to the 1990s, the
A) labour force has grown much more rapidly than employment.
B) size of both the labour force and employment has remained constant.
C) number of unemployed persons has been a much larger fraction of the
labour force than during the 1930s.
D) main trend of the economy has been one of growth in employment that
roughly matches the growth in the labour force.
Q11 If the Consumer Price Index changes from 120 in the year 1998 to
150 in the year 2000, the average rate of inflation per year over this
period is
A) 10 percent.
B) 12.5 percent.
C) 20 percent.
D) 25 percent.
E) 30 percent.
Q12 Suppose the city of Calgary, Alberta has a population of 900,000
and a labour force of 475,000. Employment is 450,000 and 30,000 workers
are unemployed. How many people are NOT in the labour force?
A) 395,000
B) 420,000
C) 425,000
D) 445,000
E) 450,000
Q13 If nominal national income increased 10 percent over a certain
period of time while real national income increased by 20 percent then
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A)
B)
C)
D)
E)
everybody in the economy became worse off.
inflation has occurred during this time period.
the labour force increased by 10 percent.
the price level has declined by about 10 percent.
the,price level has increased by approximately 10 percent.
Q14 In national income accounting, double (or multiple) counting
A) occurs when the value of output is counted more than once in the
calculation of national income.
B) occurs when the value of some output is omitted in the calculation
of national income.
C) means that pre-tax and after-tax GDP will be identical.
D) means that consumption will always be less than GDP.
E) leads to an underestimation of GDP in any given period.
Q15 Cyclical unemployment is associated with
A) changes to the economy's industrial structure resulting from growth
in some industries and decline in others.
B) deficient levels of overall demand throughout the economy.
C) disparity between the characteristics of the supply of labour and
the demand for labour.
D) people entering the labour force typically take some time to find a
job.
E) people who quit their present jobs to look for other jobs.
Q16 If 5 French francs can be exchanged for one Canadian dollar, the
dollar price of
a franc is
A) $5.00
B) $2.00
C) $1.00
D) $0.50
E) $0.20
Q17 If the Canadian dollar-yen exchange rate is 0.01, so that 0.01
Canadian dollars are required to purchase 1 yen, then the external
value of the Canadian dollar is
A) 100 Canadian dollars.
B) 10 Canadian dollars.
C) 1 yen.
D) 100 yen.
E) none of the above
Q18 In Shoetown, a rancher takes $0 worth of inputs and produces animal
skins, which he sells to the tanner for $400. The tanner then sells
leather to the shoemaker for $700, and the shoemaker then sells $1200
worth of shoes. The GDP for this economy is
A) $800.
B) $1000.
C) $1200.
D) $2300.
E) $2500.
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The Table below shows total output for an economy over 2 years.
1998
Good
Good
Good
Price
A $1.00
B $2.00
C $5.00
Quantity
100 units
200 units
100 units
1999
Good
Good
Good
Price
A $2.00
B $3.00
C $10.00
Quantity
120 units
200 units
98 units
Q19 Refer to Table. The implicit GDP deflator in 1999 was approximately
A) 105.
B) 160.
C) 180.
D) 193.
E) 203.
Q20 Which of the following does not contribute to the current value of
GDP?
A) pension payments to a retired person.
B) the purchase of windows by an automobile assembly plant.
C) fertilizer purchased by Farmer Jones to increase crop yield.
D) the purchase of a tattoo for Mary Smith's ankle.
E) gasoline purchased by a furniture delivery truck.
Q21 Unreported activities and nonmarket activities are not included in
GDP. Which of the following is a correct reason for this exclusion?
A) They do not contribute to human welfare.
B) They do not have an opportunity cost.
C) They are difficult to measure.
D) These activities do not contribute to national output of goods and
services.
E) They are morally repugnant.
Q22 Before the institution of a kind of currency board, Argentina had a
highest rate of inflation of
A) 30 percent per year
B) 1,300 percent per year
C) 3 percent per year
D) 3,000 percent per year
E) 300,000 percent per year
Q23 Many economists argue that Japan's remarkable economic success in
the last forty years was due to Japan's
A) excessive amounts of money invested into research and development.
B) high. consumption rate for high quality electronic products.
C) high savings rate.
D) restrictive trade barriers thus eliminating foreign competition.
E) skilled labour force that has been developed in the last forty years
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Q24 GDP can be represented by the equation: GDP = (GDP/L) x (L/LF) x
(LF/Pop) x Pop, where L is employment, LF the labour force and Pop is
population. Which is the best measure of productivity?
A) (GDP/L)
B) (L/LF)
C) (LF/Pop)
D) Pop
E) all of the above
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