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Transcript
Exam I Name: ________MIM________________ 1) Modern Economics is best defined a) as a social science b) as a philosophy c) as a humanitarian discipline d) as a natural science 2) The main focus of economics is on a) financial decision making b) efficiency c) historical behavior of individuals d) none of the above 3) Assume the following statistics about two countries: Country GDP Population A 100 billion $ 40 million B 50 billion $ 10 million Given the information above we can conclude that: a) Country A has a higher average standard of living than country B b) Country B has a higher average standard of living than country B c) Not enough information is provided to make a conclusive comparison about the standards of living 4) The GDP per capita in Japan is greater than in the US, but when adjusted for the purchasing price parity the inequality sign reverses. From this we can conclude that a) The prices in the US tend to be higher than in Japan b) The prices in Japan tend to be higher than in the US c) The prices in these two countries tend to be the same d) None of the above 5) Appreciation of the USD would lead to a) an increase in the rate of inflation b) a decrease in the rate of inflation c) inflation being unchanged d) inflation and currency exchange value are not related 6) 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 7) If the rate of inflation is 4%, and your savings account pays a 5% nominal interest then the real return on your account is: a) 5% b) c) d) e) 8) 1% -1% 4% 9% Which of the following facts is wrong? a) In the US economy the largest component of the GDP is the spending by households b) The US economy constitutes nearly (approximately) a quarter of the world economy c) Most of the world’s population lives in high income countries d) Currently the US economy experiences a trade deficit e) None of the above 9) If the US experiences higher inflation than the Euro zone, then, all else held constant, we should expect a) the USD to appreciate against the Euro b) the USD to depreciate against the Euro c) the value of the USD in terms of the Euro to remain the same d) inflation and currency exchange value are not related 10) Depreciation of the USD will lead to a) an increase in the rate of inflation b) a decrease in the rate of inflation c) inflation being unchanged d) inflation and currency exchange value are not related 11) 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 12) 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 For questions 13-17 identify if the value of the transaction is included in the US GDP 13) GM corporation purchases tires made by GoodYear Corporation 14) Your purchase of a hamburger at a local restaurant 15) A yard work performed by a worker paid in cash who does not report his income for tax purposes 16) A dividend payment paid by a Russian telecommunication company to a US shareholder 17) Purchase of a previously occupied house 18) Inflationary tax refers to a) the government raising the interest rate so that consumers and firms are forced to borrow funds at higher cost b) the government printing new money and injecting it into circulation, typically by paying for goods and services c) the depreciation of the domestic currency d) none of the above as there is no such concept as inflationary tax 19) Unexpected inflation is capable of a) redistributing wealth from lenders to borrowers b) redistributing wealth from borrowers to lenders c) none of the above 20) Which of the following is not an example of structural unemployment? a) with changing technology the job of a college professor may become obsolete if online teaching emerges as a popular tool, thus leading to unemployment amongst college professors b) trade liberalization has lead to a large transfer of manufacturing jobs overseas, recently, both, Ford and GM made announcements that they will be closing their plants in Atlanta leading to unemployment amongst their workers c) In 2002 the tourism industry suffered a decline and many hotel/restaurant workers lost their jobs. In less than two years the recession in the industry ended and employment levels fully recovered. d) None of the above 21) Which of the following statements is false? a) a purchase of a foreign-made good results in a sale of the USD for the currency of the country of origin of the good b) a purchase of a US made good by a resident of a foreign country will result in a purchase of the USD c) a purchase of a foreign-made good results in a purchase of the USD d) none of the above 22) Which of the following will not lead to acceleration in the rate of inflation? a) competition by firms for workers which results in wage growth exceeding productivity growth b) depreciation of the domestic currency c) an increase in input costs such as basic commodities: oil, natural gas, steel d) printing of money by the government e) none of the above GDP per capita, PPP (constant 2000 international $) GDP per capita (constant 2000 US$) Moldova 1426.0 370.0 Russian Federation 8750.0 2138.0 Ukraine 5200.0 812.0 23) Based on the information above, which country has the lowest cost of living? a) Moldova b) The Russian Federation c) Ukraine d) Not enough information is provided TRUE/FALSE 24) The retail price of a product can simply be viewed as the sum of all value added amounts across all stages of the production of the good. 25) The GDP can be viewed as the sum of all domestically generated value added amounts across all domestic production 26) Inflation can be defined as the rate of gain in the purchasing power of money 27) Inflation can be experienced differently by different individuals due to their consumption behavior 28) Presence of the shadow sector in the economy may lead to understatement of the GDP statistics 29) Real GDP is measured at contemporary prices and hence the growth in the real GDP is affected by the growth in output and the rate of inflation 30) An increase in imports will reduce the level of GDP