ECON 212 Midterm Sample, Fall 2012

Show all questions on one page — ck — —_ Income Earned by Citizens Abroad $5 Income Foreigners Earn here $15 Depreciation $4 Indirect Business Taxes $6 Business Subsidies $2 Statistical Discrepancy $0 Retained Earnings $5 Corporate Income Taxes $6 Social Insurance Contributions $10 Interest Paid to Households by Government $5 Transfer Payments to Households from Government $15 Personal Taxes $30 Non-tax payments to Government $s National income for this economy is Choose one answer. a. $96 x @® bg92Vv c. $90 x d. $88 x Correct Marks for this submission: 1/1. 2 Refer to Figure 8.10. The equation for the aggregate expenditure function AEO is Marks: 1 Aggregate expenditures ($ millions) 200 50 200 Aggregate output ($ millions) Figure $.10 Choose one answer. a. AEO = 50 + .6Y. x b. AEO = 80 + .6Y. © c. AEO = 50 + .75Y. ¥ d. AEO = 50+ .4Y. x Correct Marks for this submission: 1/1. 3 Taxes are reduced by $50 billion and income increases by $200 billion. The value of the tax multiplier is Marks: 1 Choose one answer. @ a.-4 ¥ b.-20 x c.-10 x d.-5 x Correct Marks for this submission: 1/1. 21 Marks: 1 GDP Income Earned by Citizens Abroad Income Foreigners Earn here Depreciation Indirect Business Taxes Business Subsidies Statistical Discrepancy Retained Earnings Corporate Income Taxes Social Insurance Contributions Interest Paid to Households by Government Transfer Payments to Households from Government Personal Taxes Non-tax payments to Government NNP for this economy is $110 $5 $15 $4 $6 $2 $0 $5 $6 $10 $5 $15 $30 $5 Choose one answer. a. $100 x @ »b.$96 ¥ c. $90 x d. $88 x Correct Marks for this submission: 1/1. 22 A farmer sells raw milk for 50 cents to a dairy, who sells cheese made from it for $1.50 to a grocery wholesaler, who sells it for $1.90 to a supermarket, who sells it to the final consumer for $2.19. These transactions increase the GDP by Marks: 1 Choose one answer. @ a. $0.50 + $1.00 + $0.40 + $0.29 = $2.19. ¥ b. $0.50 + $1.00 + $1.90 + $2.19 = $5.59. x c. $0.50 + $1.00 = $1.50. x d. $2.19 - $1.50 = $0.69. x e, $2.19 - $0.50 = $1.69. x Correct Marks for this submission: 1/1. 23 The APS is always__ than the MPS. Marks: 1 Choose one answer. a. smaller ¥ b. equal * c. bigger x @ d. All of the choices are possible x Incorrect Marks for this submission: 0/1. 24 Marks: 1 25 Marks: 1 Which of the following is included in U.S. GDP? Choose one answer. Oo} a. U.S. exports of goods and services ¥ b. Social Security payments * c. the sale of used goods x d. None of the answers are correct. * Correct Marks for this submission: 1/1. year price of pork 2003 $20 2004 $20 price of corn $20 $30 Suppose that the basket of goods in the CPI consisted of 3 units of pork and 2 units of corn. What is the inflation rate for 2004? Choose one answer. a. 33.3 percent x b. 25 percent * ® ¢.20percent ¥ d. 15 percent x Correct Marks for this submission: 1/1. 26 As the size of the MPC increases, the value of the balanced-budget multiplier Marks: 1 Choose one answer. a. increases x b. decreases x @ ©. remains constant ¥ d. could either increase or decrease x Correct Marks for this submission: 1/1. 27 Which of the following would increase productivity? Marks: 1 Choose one answer. a. an increase in the physical capital stock per worker x b. an increase in human capital per worker * c. an increase in natural resources per worker X @ d. All of the answers are correct. ¥ Correct Marks for this submission: 1/1. 28 Assuming that there are NO income taxes, if both autonomous taxes, and government expenditures were to rise by $100 million, we would expect Markes' equilibrium GDP to Choose one answer. © a. rise by $100 million. ¥ b. rise, but by a multiple of $100 million. * c. rise by less than $100 million. * d. remain unaffected because leakages have changed by the same amount. * Correct Marks for this submission: 1/1. 29 If the GDP deflator is greater than 100, then Marks: 1 Choose one answer. @ a. nominal GDP is greater than real GDP. ¥ b. nominal GDP is lower than real GDP. * c. nominal GDP equals real GDP. * d. prices decreased by more than double between the current and the base years. * Correct Marks for this submission: 1/1. 30 If the MPS is .2, t = .5, m = .2, the government tax multiplier is - Marks: 1 Choose one answer. a4 Xx b. 1.11 x C2 Xx @ div Correct Marks for this submission: 1/1. 31 If the MPC is .9, and the tax rate is .1, then the tax multiplier is - Marks: 1 Choose one answer. Q® a474Vv b. 4.5 x c.4 Xx d.10 x Correct Marks for this submission: 1/1. 32 Assume that the economy is initially at its equilibrium level of GDP. What will happen to the equilibrium level of GDP if planned investment decreases by 20, Marks: 1 government spending increases by 30, and taxes increase by 10? Choose one answer. a. GDP will decrease by 60 x O} b. GDP will decrease by 10 * c. there will be no change in GDP x d. GDP will increase by 10 ¥ Incorrect Marks for this submission: 0/1. 33 If C = 100 + .8Y and I = 50, then the equilibrium level of income is Marks: 1 Choose one answer. a. 600. x b. 375. x c. 187.5. x @ 4.750. ¥ Correct Marks for this submission: 1/1. 34 A 45 degree line on a graph with expenditures, E, on the vertical axis and production, Y, on the horizontal axis, represents Marks: 1 Choose one answer. a. the line of disequilibrium levels of income. * © b. all possible equilibrium levels of production and expenditures. ¥ c. some of the equilibrium levels of production and expenditures. * d. None of the choices. * Correct Marks for this submission: 1/1. 35 Assume that the level of autonomous consumption in an economy equals 400, the level of planned investment = 200, G = 0, T = 0, NX = 0, and the Marks: 1 marginal propensity to consume is 0.6. Refer to the information above. If the level of production in the economy equals 3000, the amount of saving equals and the level of unintended inventory investment equals Choose one answer. © a. 800,600 ¥ b. 400, 400 x c. 800, 800 x d. 800, 2400 x e. 1200, 1000 x Correct Marks for this submission: 1/1. 36 The price index in 2001 is 120, and in 2002 the price index is 127.2. What is the inflation rate? Marks: 1 Choose one answer. a. 5 percent x @ b.6percent ¥ c. 8 percent x d. The inflation rate is impossible to determine without knowing the base year. * Correct Marks for this submission: 1/1. 37 If S = -200 + 0.2Y and I = 100, then the equilibrium level of income is Marks: 1 Choose one answer. a. 3,000. x @® »b.1,500. ¥ ¢. 4,000. x d. 1,200. x Correct Marks for this submission: 1/1.