Download ECON 1100 – Global Economics (Section 03) Exam #2 – Spring

ECON 1100 – Global Economics (Section 03)
Exam #2 – Spring 2012 (Version B) – Answer Key
1.
___________________ refers to the ability (over time) of a society to produce
greater amounts of output.
C.
Economic Growth
2.
During the last several decades, health officials in the United States have
strengthened the case that cigarette smoking is harmful to people’s health. As a
result, there has been a significant decrease in smoking. Which of the following
is the most consistent explanation of this decrease in equilibrium quantity?
B.
Consumers (concerned about their own health) decreased their demand for
cigarettes.
3.
The World Bank is
C.
a lending agency which makes long-term low interest rate loans and
provides technical assistance to Less Developed Countries.
4.
Per Capita GDP in the United States is approximately $46,000. In comparison,
per capita GDP in the European Union is approximately
A.
$32,900 (about 28.48% less than the value for the United States).
5.
______________ is defined as the value of Real GDP divided by total population.
C.
Real GDP per Capita
6.
Coca-Cola is a substitute for RC Cola. If the price of Coca-Cola were to increase,
then
B.
Demand for RC Cola will increase.
7.
Based upon this graph, we can tell that
B.
income in “Country Z” was distributed less equally in 2011 than in 1987.
8.
Suppose (Area A)=(.16), (Area B)=(.12), and (Area C)=(.22). It follows that
between 1987 and 2011 the value of the Gini-Coefficient in “Country Z”
B.
increased from (.32) to (.56).
9.
During the past three decades in the United States, the “real household income of
the household at the 40th percentile” ______________ and the “real household
income of the household at the 60th percentile” ______________.
A.
increased; increased.
10.
The “Great Inflation” refers to the period of high inflation in the U.S. during the
C.
early 1970s through the early 1980s (from roughly June 1973 to July
1982).
11.
The equilibrium quantity of trade and equilibrium price in a free market are
determined by
A.
the interaction of both the buyers and the sellers in the market.
12.
The value of the “Misery Index” in the U.S. in November 2011 was
C.
11.99, the 25th consecutive month with a realized value above 10.
13.
Per Capita GDP in Germany is $34,000, while Per Capita GDP in Poland is only
$16,200. These values directly imply that
D.
None of the above answers are correct.
14.
Tim owns a copy of the book “The Economic Naturalist: In Search of
Explanations for Everyday Enigmas,” autographed by the author Robert Frank.
His reservation price as a seller of this item is $75. Chris’ reservation price as a
buyer of this item is $90. Trading this item would generate a Social Surplus of
A.
$15.
15.
Transactions involving goods produced in the past (such as the sale of a ten year
old automobile by a used car dealer) are
A.
not included in current GDP, because GDP only measures the value of
goods and services produced in the current year.
16.
Between 2011 and 2012, we would expect that the PPC for this society will have
B.
shifted outward from the origin (i.e., the 2012 PPC would be further from
the origin than the curve illustrated above).
17.
If this society had instead chosen “Point B” in 2011, then we would expect that
GDP Per Capita would have
D.
increased by even more than 6.4%.
18.
Between 1980 and 2007 the “percentage of income earned by the Top 1% of
households in the United States”
B.
increased from roughly 8.46% of society’s income up to roughly 22.83%
of society’s income.
19.
Suppose that “County A” were to realize a constant Real GDP Growth Rate of
10% per year. It follows that Real GDP would double
C.
in roughly 7 years.
20.
On a monthly basis, the Unemployment Rate in the United States has taken on a
mean value of 5.76% and a median value of 5.6% since January 1948. In
November 2011 the rate was
B.
8.6%, the 34th consecutive month with a realized value above 8%.
21.
Between March 2011 and January 2012 there was an increase in the equilibrium
price but decrease in the equilibrium quantity of soybeans. This change in market
equilibrium outcome would result from
B.
a decrease in Supply.
22.
___________________ refers to a general decrease in the level of overall prices.
A.
Deflation
23.
In 2007, Real GDP Per Capita in the United States was __________________ the
value of Real GDP Per Capita in the United States in 1908.
A.
7.9 times larger than
24.
The consumer of the 3,000th unit has a buyer’s reservation price of
D.
$16.95.
25.
In this market there would be ____________ at a price of $9.99.
B.
excess demand
26.
In equilibrium
C.
Both (A) and (B) are correct.
27.
Suppose that the equilibrium quantity of trade is efficient. It follows that if 8,900
units were traded, then Deadweight Loss would be
A.
equal to “Area (g).”
28.
The “Law of Demand” implies that
C.
a demand curve should be downward sloping (i.e., negatively sloped).
29.
Chile, Panama, Bolivia, Rwanda, and Ethiopia are “Less Developed Countries.”
Such nations
D.
have relatively low incomes, as a result of lacking both large stocks of
technologically advanced capital and a well-educated labor force.
30.
As of 2009, Life Expectancy at Birth in Japan was 82.12 years. This figure was
A.
longer than the corresponding figure in both the United States (78.11
years) and India (69.89 years).
31.
Which of the following would be an example of Foreign Private Investment?
A.
Coca-Cola builds a new manufacturing plant in China.
32.
In the model of Supply and Demand, the market equilibrium
D.
More than one (perhaps all) of the above answers is correct.
33.
If “County A” currently has an Inflation Rate of 4.5% and an Unemployment Rate
of 6.0%, then the value of the Misery Index in “County A” would be ______.
B.
10.5
34.
The __________________ refers to the “trap” in which countries are poor
because they cannot afford to save and invest, but they cannot easily save and
invest because they are poor.
C.
Vicious Cycle of Poverty
35.
The Gini-Coefficient provides a quantitative measure of
C.
income equality/inequality within a society.
36.
In a “free market economy” profits
C.
serve as a “signaling device,” directing resources to their most valued
uses.
37.
Supply
D.
More than one (perhaps all) of the above answers is correct.
38.
A country would likely be able to realize “economic growth” as a result of
C.
making deliberate investments in human resources, so that its workforce
becomes more highly educated and more skilled.
39.
_______________ broadly refers to the transfer of financial resources from one
government to another, with no requirement or expectation of repayment.
B.
Foreign Aid
40.
In 2010 “Country B” realized an unemployment rate of 7.2% and an inflation rate
of 2.4%. By 2011, the unemployment rate had decreased to 6.6%. Supposing
that the relation summarized by the Phillips Curve holds, which of the following
is a reasonable value for the inflation rate in 2011?
C.
3.5%.