ECN202 Sp 16:
Exam1A
1. Given the way we measure GDP, which of the following would increase GDP?
a. My purchase of a 2012 BMW
b. My daughter’s decision to leave her job to raise her children
c. My son’s decision to ride his bike to work instead of driving
d. My purchase of a new computer for my office
e. My purchase of Facebook stock as a good investment
2. Which of the following is most likely to explain what happened in 1985-86?
a. increase in supply
b. increase in demand
c. increase in supply and demand
d. decrease in supply and increase in demand
3. You cannot have missed the debate in the US over the stimulus package in 2009 - or at least you should not have missed it. In the
debate you could see ______ pushing for increased spending on the social safety net and ______ pushing for spending cuts targeted
at some lower income groups.
a. Socialists / liberals
b. conservatives/ conservatives
c. conservatives / liberals
d. liberals / conservatives
4. The article about the petition of candle manufacturers was a good example of___.
a. The universality of the power of the supply & demand model
b. The support for international trade based on the grounds it stimulates economic growth
c. The problem of higher prices if there is an increase in supply
d. The argument against international trade
5. Given the track record of tariff rates in the US reflected
in the graph, which of the following statements is most
likely to be correct.
a.
b.
c.
d.
In the 1920s the US Congress was looking to grow
international trade
In the post WW II era the US Congress was looking
to increase international trade
The US Congress’ immediate response to the Great
Depression’s onset was a lowering of tariffs
The victory of the North in the Civil War brought
with it policies to increase US imports
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6. GDP is used as an indicator of a country’s economic situation, so if I were interested in getting a good sense of how much output
in the economy shrank in the most recent recession, which of the following would be the best indicator?
a. real GDP
b. real GDP per capita
c. CPI
d. nominal GDP
7. One of the themes in the course is macroeconomics matters, so which of the following is an article that focuses on the life an
death importance of macroeconomic performance?
a. The First Cold War
b. Easy, Useless Economics
c. Welcome to the Age of Denial
d. Lust for Gold
8. Which of the following statements can you make based only
on the information presented in this graph that? [Remember it
is a ratio variable]
a.
b.
c.
d.
Defense spending was highest in the 1960s during the
Vietnam War
Defense spending was lower in 2013 than in 1985
In the 1990s the share of the budget allocated to defense
declined
Between 1962 and 1982 defense spending declined by
about 30%
9. In the aftermath of WWII countries chose two paths – to open their country up to international trade or to close it
down. Which of the following countries initially shut itself off from trade after WWII and then opened itself up and
became one of the world’s fastest growing economies?
a. Japan
b. Korea
c. China
d. Russia
10. Which one of the following statements is true when we look at economic history?
a. two of the more volatile components of the CPI are energy and food
b. inflation rates in the US rose substantially after the Great Recession
c. differences in the inflation rates of European countries rose sharply after adoption of the euro
d. one of the differences between before and after WWII is that after WWII the CPI has experienced more periods of actual
decline
11. Which of the following statements is not consistent with
the relationship evident in this graph?
a.
b.
c.
d.
Strong economic growth will help the Democrats in the
2016 election
The Democrats should have won the 1932 election
Elections such as the 2016 where there will be no
incumbent president running favor the opposition party.
Republicans could be expected to thwart policies to
improve the economy to increase their chances to win the
2016 election.
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12. In class I mentioned the basic premises upon which macroeconomics is based and we looked at a number of headlines that
captured the premises. Which of the following would be a headline you would expect to see in a discussion of the idea that macro
matters?
a. “Increase in suicide rate in Europe as economy suffers in the Great Recession”
b. “In 4th quarter lower interest rates spur construction spending”
c. "Synchronised fiscal and monetary policies must be in place if Zimbabwe is to deal with the hyperinflation which has become
a cancer in the economy"
d. “Higher interest rates are projected to lead to reduced demand in the interest sensitive sectors”
13. When you look at the graph of the federal funds
interest rate you can see___
a.
b.
c.
d.
monetary policy at work in 2006 as the Fed tries
to slow the economy
monetary policy at work in 2008 as the Fed tries
to slow the economy
fiscal policy at work in 2008 as the Fed tries to
slow down the economy
fiscal policy at work in 2008 as the Fed tries to
stimulate the economy
14. Word has it that recent developments have increased demand and supply in the market for oil. Based on this information, which
of the following would be the most accurate forecast of the market?
a. The price will rise, but we do not know what will happen to output
b. The price will fall, but we do not know what will happen to output
c. Output will rise, but we do not know what will happen to price
d. Output will fall, but we do not know what will happen to price
1980
1998
2000
2005
2010
2013
15. What is the real interest rate in 2000?
a.
4.8
b. 3.2
c. 2.6
Interest
rate
11.4
5.3
6.0
4.3
3.2
2.4
CPI
82
163
172
195
218
233
Earnings
241
449
481
544
637
678
d. .8
16. Which of the following would result in an increase in real wages?
a. Wages rise and prices rise faster
b. Wages rise and prices fall
c. Wages fall and prices fall slower
d. Wages fall and prices rise
Because there are 2 answers I will ignore this question
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Inflation
rate
13.5
1.6
3.4
3.4
1.6
1.5
17. Which is the best story to go with the diagrams above?
a. Under Mao, China was a success story due to its openness to international trade
b. Under Gandhi, India was a success story due to its openness to international trade
c. The success of the Asian Tigers in the first decades after WW II was due to their openness to international trade
d. The slowdown in W. Europe and the US in the latter period was due to substantial increases in tariffs
18. If we have a very simple world in which Italy and Greece
are contemplating trading cloth (C )l and wine (W). If these
production possibility curves represent the productive
capacities of the two countries, ____
a.
b.
c.
d.
there is no basis for trade because Italy is better at
everything
we can expect the opening of clothing factories in Italy as
Italy exports clothes
we can expect the closing of clothing factories in Italy as
Italy exports wine
we can expect the opening of wineries in Greece as Italy
imports wine
19. Above is a table of four variables representing certain aspects of the US labor market. The columns are all percentages and
represent the labor force participation rate for white females and males and unemployment rates for white and black males. Given
the characteristics of the US labor market, which of the columns would be the labor force participation rate for white females?
a. A
b. B
c. C
d. D
20. Which of the following is a measure of disequilibrium in a macro market?
a. Student loans
b. US imports of shirts from China
c. unemployment rate
d. interest rates on student loans
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21. The headline read: "Craft beer prices to rise,” and the reason given was that droughts in the United States and Australia lowered
the supply of hops, a key ingredient. The best way to translate this story into a S&D graph of the craft beer market would be graph
__.
a. a
b. b
c. c
d. d
e. e
22. Above is a table of output market data. Based on the table, in 2000 GDP was ____. [best approximation]
a. 9,040
b. 10.920
c. 11,210
d. 12,340
23. The headline was "Coffee prices expected to fall in 2016 due to favorable weather." If I wanted to show this using a S&D graph
then I would ___.
a. shift the supply curve in
b. shift the supply curve out
c. shift the demand curve out
d. shift the demand curve in
24. Immigration is one of the demographic drivers behind changes in the economy and it is an important issue in the Republican
primary. Which of the following statement concerning immigration is true?
a. Iowa is a key state to have the early presidential contest – the caucuses – because it has a higher percentage of foreign born
residents that makes it representative of the US
b. The foreign-born share of the US population has been declining as a result of high levels of immigration
c. Immigration levels in the US are reaching levels not seen since the Great Depression in the 1930s
d. Immigration levels today are the highest in US history and this is increasing the Hispanic / Latino share of the US population.
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25. Given the data in the table above, what was the unemployment rate in 2008? (closest approximation)
a. 9.6%
b. 8.9%
c. 8.1%
d. 5.8%
26. Which variables are in this graph?
a.
b.
c.
d.
The rate of unemployment and underemployment
Shares of total employment in manufacturing and
services
Labor force participation rates for men and women
Unemployment rates for college and high school
educated males
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27. Which of the following explains the difference between the two measures of GDP?
a. A deep recession
b. A decline in the exchange rate
c. High levels of inflation
d. Low levels of unemployment
28. In the Consumer Price Index (CPI) graph are price indexes
for Medical care, Food, and Apparel. Which line represents the
CPI for Apparel?
a.
b.
c.
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A
B
C