University of Maryland College Park Economy Multiple Choice Questions

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This multiple-choice test consists of a total of eighty (80) multiple choice questions. The first sixty (60) questions are compulsory for all students. The other twenty (20) questions are for extra credits and are therefore optional for all students.

Choose the best answer among the options for each of the question below

Do all Questions

(1)Which of the following statements is true?

Principle#6:

(a)Is one of three (3) principles that are organized in its category

(b)States that “Markets are usually a good way to organize economic activity”

(c)Is organized in category#2

(d)All of the above

(2)Which of the following pairs of principles is organized in category#3?

(a)”The cost of something is what you give up to get it” and “Trade makes everyone and every nation better off”

(b) “Rational people think and make decision at the margin” and “People face trade-offs”

(c)”Trade makes everyone and every nation better off” and “Government can sometimes improve market outcomes”

(d) “There is a short run trade-off between inflation and unemployment and “A country’s standard of living depends on its ability to produce goods and services”

(3)Which of the following statements is true?

Marketplaces are:

(a)Markets

(b)Physical locations where trade occurs between buyers and sellers

(c)Have a demand and supply side

(d)All of the above

(4)Which of the following statements about normative economic analysis is false?

(a)Their validity can be tested by statistical methods and experiments

(b)It is a type of analysis that is descriptive in character

(c)This type of economic analysis poses the question what is about an economic phenomenon?

(d)All of the above

(5)The average price of regular unleaded gasoline in Fairfax County should be about $2.15. This statement is an example of:

(a)A normative statement

(b)A positive statement

(c)A statement of the fallacy of composition

(d)A deductive statement

(6)Which of the following statements is true?

The fallacy of composition is:

(a)A flawed statement

(b)The confusion of the whole and the parts of the whole

(c)A very common analytical error

(d)All of the above

(7)The Federal Reserve Bank is:

(a)Another name for the Department of Commerce

(b)The Central Bank of the USA

(c)A Department in the Department of Treasury

(d)None of the above

(8)Which of the following statements is false?

The Federal Reserve Bank was established by an Act of Congress:

(a)On July 23rd 1945

(b)On December 23rd 1915

(c)On October 10th 1913

(d)All of the above

(9)Which of the following statements is true?

When net export is positive in an economy, the GDP:

(a)Increases

(b)Decreases

(c)A BOT surplus results

(d)(a) or (c) above

(10)Suppose you are told that the monetary value of gross investment or Ig in an economy is equal to $45b in 2012 and the monetary value of the economy’s GDP is equal to $280b in the same year, what would be the rate of investment in the economy in 2012?

(a)25 percent

(b)35 percent

(c)More information needed

(d)None of the above

(11)Suppose a retired musician volunteers 1000 hours of her services to a group of young children in elementary schools each year, assuming that the market value of her services in a year are $50,000, a macroeconomist who says that the GDP of her country will increase by $50,000 is:

(a)Correct

(b)Incorrect

(c)(a) or (b) above

(d)More information needed to respond

Table#1-National Income Accounts

National Income Accounts

$Billions

Consumption expenditures

$2568

Interest

190

Corporate profit

150

Depreciation

200

Rent

70

Gross domestic investment

1250

Compensation of employees

830

Federal government expenditures

530

State government expenditures

245

Local government expenditures

140

Exports

220

Imports

270

(12)The GDP in Table#1 is equal to:

(a)$4675b

(b)$5430b

(c)$3420b

(d)None of the above

(13)In Table#1, NDP equals:

(a)$2756b

(b)$4560b

(c)$4320b

(d)None of the above

(14)As shown in Table#1, the GDP will___________________ because net export is________________________:

(a)Decrease, positive

(b)Increase, negative

(c)More information needed

(d)None of the above

(15)The GDP of a country includes only____________

(a)Intermediate and legitimate goods and services

(b)Final and legitimate goods and services

(c)Intermediate inputs

(d)Final and illegitimate goods and services

(16)Which of the following is the monetary value of capital consumption allowances for the economy represented in Table#1 above?

(a)$450b

(b)$200b

(c)$630b

(d)None of the above

(17)Which of the following is aggregate government expenditures or G in Table#1 above?

(a)$890b

(b)$905b

(c)$915b

(d)None of the above

(18)Which of the following expenditures would not be included in a country’s GDP in the year 2015?

(a)Purchase of a new refrigerator that was made in 2012

(b)Purchase of tickets to Jazz concerts in 2005

(c)Purchase of diamond bracelets made in 2009

(d)None of the above

(19)Which of the following is an example of financial investment spending in an economy?

(a)The construction of a neurosurgical hospital in Cleveland

(b)The purchase of 100 drilling machines for deep water drilling

(c)The purchase by the CEO of a company of $120m worth of stocks

(d)A multimillion dollar renovation of the physical structure of a mall

(20)Suppose the gross personal incomes of households in an economy are equal to $860 billion and the personal disposable incomes of the same households are equal to $775 billion, what would be the aggregate taxes of these households?

(a)$180 billion

(b)$88 billion

(c)$75 billion

(d)None of the above

(21)Generally, a recession is defined as a decline in real GDP lasting at least:

(a)1 year

(b)6 months

(c)3 months

(d)One quarter

(22)Suppose the market value of lawn mowing services performed by members of households in the US in 2016 was $20b, macroeconomists who say that US GDP in 2016 would have increased by $20b, would be_______________________________

(a)Correct

(b)Incorrect

(c)More information needed for an answer

(d)None of the above

(23)Another name for undistributed corporate profits is:

(a)Corporate taxes

(b)Personal income

(c)Retained earnings

(d)Transfer payments

(24)Which of the following statements is false?

If net export is positive in an economy, it implies that:

(a)GDP will increase

(b)There is a surplus on the BOT

(c)There is a deficit on the BOT

(d)The value of exports is greater than the value of imports

Table#2-Macroeconomic Data

Year

GDP in Current dollars (billions)

Implicit price deflator

GDP in real or 1982 dollars (billions)

Population (millions)

GDP per capita 1982 dollars

1970

1,215.5

44.0

3,417.8

205.1

11,788

1971

46.4

2,483.6

207.7

1972

1,312.6

4,608.2

209.9

12,426

1973

1,359.3

2,746.1

12,959

1974

1,472.8

54.0

213.9

1975

59.3

5,695.4

216.0

1976

1,882.8

2,825.3

12,960

1977

1,990.5

67.3

220.2

1978

75.2

3,115.9

12,998

1979

78.8

3,183.0

225.1

1980

2,732.0

3,151.1

13,839

(25)Which of the following is the GDP in current dollars in 1975 in Table#2 above?

(a)$31,265.7b

(b)$2,343.2b

(c)$3,377.4b

(d)$6,876.4b

(26)Which of the following is the GDP expressed in constant dollars in 1973 in Table#2 above?

(a)$3,654.4

(b)$1,359.3

(c)$2,746.1

(d)$3,151.1

(27)Which of the following is the GDP deflator in 1971 in Table#2 above?

(a)76.4

(b)68.8

(c)46.4

(d)None of the above

(28)Suppose in 1995, the nominal GDP of China was $5,744 billion and the GDP deflator was 140. China’s GDP expressed in constant dollars in 1996 is:

(a)$5,376b

(b)$4,103b

(c)$6,286b

(d)None of the above

(29)Which of the following statements about nominal export earnings is true?

(a)They are adjusted for inflation

(b)They are not adjusted for inflation

(c)Their dollar value is less than the dollar value of real exports

(d)None of the above

(30)Suppose you are told that the GDP Deflator in an economy for 1998 was 180 and its GDP Deflator in 2010 was 220, what was the rate of inflation for the economy over the years 1998-2010?

(a)26 percent

(b)19 percent

(c)More information needed

(d)None of the above

(31)Which of the following pairs of countries is classified as a newly industrialized nation?

(a)South Africa and Albania

(b)South Korea and Brazil

(c)Peru and Taiwan

(d)None of the above

(32)Economic development in any society encompasses:

(a)Distribution of income

(b)Legal system

(c)Education

(d)All of the above

(33)Suppose the rate of GDP growth expressed in constant dollars is 8.4 percent annually and the rate of population growth is 5.2 percent annually during the period 1990-2005, then the rate of constant GDP per capita growth during the cited period is:

(a)1.2 percent

(b)3.2 percent

(c)2.2 percentp

(d)More information needed

(34)According to the Rule of 70, the rate of real GDP growth for the economy referenced inQ#33 will take ____________________to double.

(a)6.3 years

(b)8.3 years

(c)9.5 years

(d)22 years

(35)Which of the following statements is true?

The international trade policy known as protectionism is:

(a)A policy tool for development in and developing countries

(b)Employed by governments to protect young industries from foreign competition

(c)An explicitly anti-free trade development policy

(d)All of the above

(36)Which of the following statements is true

The development strategy known as EOI is:

(a)A pro-free trade industrial policy

(b)A free market industrial policy

(c)A protectionist industrial policy

(d)An anti-growth strategy

(37)Which of the following statements is false?

The theory of comparative advantage is:

(a)A 17th century international trade theory

(b)A trade theory based on specialization of production due to relative cost advantage

(c)A trade theory that was developed by the English political economist David Ricardo

(d)None of the above

(38)Which of the following statements is false?

The US and Britain were able to achieve relatively rapid industrial development because of:

(a)Anti-free trade industrial policies

(b)Strong protectionist policies

(c)Strong interventionist fiscal policies such as subsidies and tax breaksfor investors

(d)All of the above

(39)Which of the following statements is false?

A quota is known as a:

(a)An anti-free trade growth and development policy

(b)Quantitative restriction on imports of a good

(c)A non-tariff barrier

(d)None of the above

(40)The GDP expressed in current dollars in 1973 and 1989 is ______________ and _____________given that the CPI in 1973 is 140 and 160 in 1989.

(a)$8246b and $7864b

(b)$7456b and $6438b

(c)$1103b and $1352b

(d)$1435b and $2253b

Table#3-Disposable Income, Consumption and Savings Data

Disposable Income or (Yd)

Consumption or (C)

Saving or (S)

$ 0

$ 500

$

14,500

-1200

18,650

850

24,785

32,596

36,768

0

48,655

(41)Which of the following is consumption spending for the household in Table#3 above when saving is -$1200?

(a)$13,300

(b)$16,700

(c)More information needed

(d)None of the above

(42)Suppose 50 percent of the household’s disposable income shown in the 5th row in Table#3 above represents consumption expenditures, it would be plausible to conclude that consumption expenditures are:

(a)$14,785 and savings are $7436

(b)$16,856 and savings are $9,654

(c)$14,771 and savings are $9,914

(d)None of the above

(43)Would the trade-off between consumption expenditures and savings cited in the household in Q#42 above favor saving or consumption?

(a)Savings

(b)Consumption

(c)Neither savings nor consumption

(d)More information needed to respond

(44)Which of the following statements is false?

The aggregate consumption expenditures of a country’s GDP is made up of:

(a)Business investment expenditures

(b)Durable consumption expenditures

(c)Services expenditures

(d)None of the above

(45)Which of the following statements is true?

GDP@market price:

(a)Includes subsidies and excludes indirect taxes

(b)Excludes subsidies and includes indirect taxes

(c)Includes both subsidies and indirect taxes

(d)None of the above

(46)Suppose a country’s GDP@factor cost is equal to $680b, subsidies=$45b, indirect taxes=$15b and its capital consumption allowances=$85b, what is the NDP@market price of the country?

(a)$650b

(b)$565b

(c)More information needed

(d)None of the above

(47)Which of the following statements is false?

(a)NDP@market price excludes subsidies and includes indirect taxes

(b)The rate of investment is equal to $gross investment\$GDP x 100

(c)Price indices measure the average movement of prices in an economy

(d)None of the above

(48)Which of the following statements about subsidies is false?

(a)They are government expenditures that are used to defray the costs of production of specific firms, industries and consumer prices

(b)They are also known as negative taxes in an economy

(c)They are included in the calculation of a nation’s GDP at market price and NDP at market price

(d)Any of the above

(49)Which of the following statements about a nation’s real GDP is false?

(a)The real GDP is the inflation-adjusted GDP

(b)The real GDP is the GDP not adjusted for inflation

(c)The real GDP is equal to nominal GDP divided by GDP Deflator x100

(d)(a) and (c) only

(50)If an economy’s population grows at 3 percent and real GDP grows at 4 percent on average during 1985-1995:

(a)Per capita real GDP is increasing

(b)Per capita real GDP is constant

(c)Per capita real GDP is decreasing

(d)The economy’s standard of living is rising

(51)The phase of the business cycle that follows the phase of a downturn is__________________

(a)The recovery phase

(b)The peak phase

(c)The trough phase

(d)None of the above

(52)A tariff has the effect of granting_____ _______________________________a larger share of the domestic market.

(a)Domestic consumers

(b)Foreign producers

(c)Domestic producers

(d)Foreign consumers

(53)Which of the following statements is false?

A shift to the left in the PPF curve of a country’s economy mean that there is:

(a)A contraction in the economy

(b)The possibility that development is unfolding in the economy

(c)The evolution of the backward-forward linkages within the economy

(d)None of the above

(54)Development is feasible in the absence of growth in a society is:

(a)A false statement because growth is a sufficient condition for development

(b)A true statement because growth is a necessary and sufficient condition for development

(c)A true statement because growth is a necessary though not a sufficient condition for development

(d)None of the above

(55)Which of the following statements is true?

A pair of protectionist policy is:

(a)Tariffs and customs delays

(b)Exchange controls and quotas

(c)(a) and (b) above

(d)All of the above

(56)Which of the following pairs of countries is classified as gang of four nations?

(a)Singapore and Taiwan

(b)South Korea and India

(c)Peru and Taiwan

(d)Russia and Ghana

(57)Suppose the real GDP of the economy of Macklandia is given to you as being equal to $450 billion in 1998 and it’s given to you as $385 billion in 2005, what is the growth real of real GDP per capita during the years 1998-2005 for Macklandia:

(a)5.3 percent

(b)2.9 percent

(c)6.2 percentp

(d)More information needed

(58)Would you be able to calculate Macklandia’s GDP growth rate with the information given in Q#57 above?

(a)No

(b)Yes

(c)More information needed

(d)All of the above

(59)What is the GDP growth rate of Macklandia during the period 1998-2005?

(a)6.4 percent

(b)8.3 percent

(c)3.6 percent

(d)None of the above

(60)Which of the following statements is true?

Payments to households not in exchange for goods and services currently produced are:

(a)Disposable incomes

(b)Transfer payments

(c)Undistributed corporate profits

(d)Net interest payments

EXTRA CREDIT QUESTIONS-OPTIONAL

(61)Which of the following statements is false?

Customs delays are known as a:

(a)An anti-free trade growth and development policy

(b)Quantitative restriction on imports of a good

(c)A non-tariff barrier

(d)All of the above

(62)Which of the following pairs of economists are classical economists?

(a)David Ricardo and Joseph Stiglitz

(b)Norman Girvan and Paul Krugman

(c)John Stuart Mills and Robert Malthus

(d)Michael Hudson and Larry Summers

(63)Which of the following pairs is an intellectual property rights?

(a)Free markets and central planning

(b)Copyrights and free trade

(c)Patents and trademarks

(d)Software and trade secrets

(64)Which of the following statements is false?

The development strategy known as export-oriented industrialization is known as:

(a)A pro-growth policy

(b)A pro-industrialization policy

(c)A protectionist industrial policy

(d)None of the above

(65)Which of the following pairs of countries belongs to the bloc of nations known as the BRICS?

(a)Britain and Ireland

(b)Russia and South Korea

(c)Brazil and South Africa

(d)Germany and India

(66)The combination of frictional and structural unemployment in a nation’s labor force is called the-------------------

(a)Civilian rate of unemployment

(b)Natural rate of unemployment

(c)Transitional rate of unemployment

(d)Voluntary unemployment

(67)Suppose the number of people who are unemployed in a country’s labor force is 8 million persons and the number of people in the country’s labor force is 60 million, which of the following is the rate of unemployment in the country’s labor force?

(a)8 percent

(b)10 percent

(c)13 percent

(d)20 percent

(68)Which of the following represents the rate of underemployment if you are told that 5 million persons in the labor force in Q#67 are underemployed?

(a)4 percent

(b)8 percent

(c)25 percent

(d)Any of the above

(69)Sydney, a brilliant Ph.D candidate in software engineering, has turned down several job offers because he hopes eventually to do research at one of the leading universities in his field. The type of unemployment Sydney experiences is:

(a)Seasonal

(b)Cyclical

(c)Structural

(d)None of the above

(70)Miriam Lembaba, who works in a candle factory, becomes unemployed because more people are buying electric lighting systems instead of candles. Susan can best be described as:

(a)Frictionally unemployed

(b)Cyclically unemployed

(c)Structurally unemployed

(d)Seasonally unemployed

(71)Evadney Watson, a housewife in Atlanta, Georgia, who claims on a BLS survey that she is neither gainfully employed nor looking for work, is, according to the BLS,

(a)Is counted as retired

(b)Is counted as unemployed

(c)Is counted as self-employed

(d)None of the above

(72)A person who voluntarily quits her job in Los Angeles and expects to get a similar job in Washington DC is an example of:

(a)Cyclical unemployment

(b)Frictional unemployment

(c)Structural unemployment

(d)Seasonal unemployment

(73)Consider a broom factory that closes permanently because of foreign competition. If the broom factory workers are unable to find new jobs because their skills are no longer marketable, then they are classified as:

(a)Voluntary unemployed

(b)Technologically unemployed

(c)Structural unemployed

(d)Cyclical unemployed

(74)A marginalized worker is one who----------------------------------

(a)Has very little skills

(b)Is underemployed

(c)Is permanently left out of the labor force

(d)None of the above

(75)Suppose an economy is made up of 100 million people, 60 million of whom have jobs, 10 million of who are looking for jobs, and 15 million of whom are retired. The number of people in the civilian labor force is:

(a)30 million

(b)60 million

(c)70 million

(d)85 million

(76)Which of the following types of unemployment results when workers are willing to work at a prevailing wage rate though firms are unwilling to employ all of them at that wage rate?

(a)Cyclical

(b)Involuntary

(c)Seasonal

(d)Voluntary

(77)Christopher is a musician who is out of work because increasingly electronic equipment is replacing live musicians at various gigs. This is an example of:

(a)Frictional unemployment

(b)Technological unemployment

(c)Natural rate of unemployment

(d)Cyclical unemployment

(78)If the PPI in 1980 was 160 and the PPI for 1985 was 250, the rate of inflation was:

(a)25 percent

(b)35 percent

(c)18 percent

(d)None of the above

(79)Which of the following statements is true?

The rate of inflation calculated in Q#78 above measures:

(a)Inflation in the whole economy of a country

(b)Inflation in producers’ prices

(c)Inflation in wholesale prices

(d)None of the above

(80)Which of the following policy according to Keynes is best suited to stimulate an economy that is experiencing a downturn in the business cycle?

(a)A contractionary monetary policy

(b)A contractionary fiscal policy

(c)An expansionary fiscal policy

(d)An expansionary monetary policy

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Take-Home Test#3 Date Issued: Sunday, November 3rd 2019 Date Due: Monday, November 18th 2019 Course: Macroeconomics 201-42N #Credits:3.0 Instructor’s Name: Michael Heslop Telephone#: (703)-323-3254 e-mail address :mgheslop@nvcc.edu Office#: CN 214J Mailbox: CN 214 Semester/Year: Fall 2019 Class/Time: M:7:30PM-10:35PM (CN 127) This multiple-choice test consists of a total of eighty (80) multiple choice questions. The first sixty (60) questions are compulsory for all students. The other twenty (20) questions are for extra credits and are therefore optional for all students. Choose the best answer among the options for each of the question below Do all Questions (1)Which of the following statements is true? Principle#6: (a)Is one of three (3) principles that are organized in its category (b)States that “Markets are usually a good way to organize economic activity” (c)Is organized in category#2 (d)All of the above (2)Which of the following pairs of principles is organized in category#3? (a)”The cost of something is what you give up to get it” and “Trade makes everyone and every nation better off” (b) “Rational people think and make decision at the margin” and “People face trade-offs” (c)”Trade makes everyone and every nation better off” and “Government can sometimes improve market outcomes” (d) “There is a short run trade-off between inflation and unemployment and “A country’s standard of living depends on its ability to produce goods and services” (3)Which of the following statements is true? Marketplaces are: (a)Markets (b)Physical locations where trade occurs between buyers and sellers (c)Have a demand and supply side (d)All of the above (4)Which of the following statements about normative economic analysis is false? (a)Their validity can be tested by statistical methods and experiments (b)It is a type of analysis that is descriptive in character (c)This type of economic analysis poses the question what is about an economic phenomenon? (d)All of the above (5)The average price of regular unleaded gasoline in Fairfax County should be about $2.15. This statement is an example of: (a)A normative statement (b)A positive statement (c)A statement of the fallacy of composition (d)A deductive statement 1 (6)Which of the following statements is true? The fallacy of composition is: (a)A flawed statement (b)The confusion of the whole and the parts of the whole (c)A very common analytical error (d)All of the above (7)The Federal Reserve Bank is: (a)Another name for the Department of Commerce (b)The Central Bank of the USA (c)A Department in the Department of Treasury (d)None of the above (8)Which of the following statements is false? The Federal Reserve Bank was established by an Act of Congress: (a)On July 23rd 1945 (b)On December 23rd 1915 (c)On October 10th 1913 (d)All of the above (9)Which of the following statements is true? When net export is positive in an economy, the GDP: (a)Increases (b)Decreases (c)A BOT surplus results (d)(a) or (c) above (10)Suppose you are told that the monetary value of gross investment or Ig in an economy is equal to $45b in 2012 and the monetary value of the economy’s GDP is equal to $280b in the same year, what would be the rate of investment in the economy in 2012? (a)25 percent (b)35 percent (c)More information needed (d)None of the above (11)Suppose a retired musician volunteers 1000 hours of her services to a group of young children in elementary schools each year, assuming that the market value of her services in a year are $50,000, a macroeconomist who says that the GDP of her country will increase by $50,000 is: (a)Correct (b)Incorrect (c)(a) or (b) above (d)More information needed to respond Table#1-National Income Accounts $Billions National Income Accounts Consumption expenditures Interest Corporate profit Depreciation Rent Gross domestic investment Compensation of employees Federal government expenditures State government expenditures Local government expenditures Exports Imports $2568 190 150 200 70 1250 830 530 245 140 220 270 (12)The GDP in Table#1 is equal to: (a)$4675b (b)$5430b (c)$3420b (d)None of the above (13)In Table#1, NDP equals: (a)$2756b (b)$4560b 2 (c)$4320b (d)None of the above (14)As shown in Table#1, the GDP will___________________ because net export is________________________: (a)Decrease, positive (b)Increase, negative (c)More information needed (d)None of the above (15)The GDP of a country includes only____________ (a)Intermediate and legitimate goods and services (b)Final and legitimate goods and services (c)Intermediate inputs (d)Final and illegitimate goods and services (16)Which of the following is the monetary value of capital consumption allowances for the economy represented in Table#1 above? (a)$450b (b)$200b (c)$630b (d)None of the above (17)Which of the following is aggregate government expenditures or G in Table#1 above? (a)$890b (b)$905b (c)$915b (d)None of the above (18)Which of the following expenditures would not be included in a country’s GDP in the year 2015? (a)Purchase of a new refrigerator that was made in 2012 (b)Purchase of tickets to Jazz concerts in 2005 (c)Purchase of diamond bracelets made in 2009 (d)None of the above (19)Which of the following is an example of financial investment spending in an economy? (a)The construction of a neurosurgical hospital in Cleveland (b)The purchase of 100 drilling machines for deep water drilling (c)The purchase by the CEO of a company of $120m worth of stocks (d)A multimillion dollar renovation of the physical structure of a mall (20)Suppose the gross personal incomes of households in an economy are equal to $860 billion and the personal disposable incomes of the same households are equal to $775 billion, what would be the aggregate taxes of these households? (a)$180 billion (b)$88 billion (c)$75 billion (d)None of the above (21)Generally, a recession is defined as a decline in real GDP lasting at least: (a)1 year (b)6 months (c)3 months (d)One quarter (22)Suppose the market value of lawn mowing services performed by members of households in the US in 2016 was $20b, macroeconomists who say that US GDP in 2016 would have increased by $20b, would be_______________________________ (a)Correct (b)Incorrect (c)More information needed for an answer (d)None of the above (23)Another name for undistributed corporate profits is: (a)Corporate taxes (b)Personal income (c)Retained earnings (d)Transfer payments (24)Which of the following statements is false? If net export is positive in an economy, it implies that: (a)GDP will increase (b)There is a surplus on the BOT (c)There is a deficit on the BOT 3 (d)The value of exports is greater than the value of imports Year 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 Table#2-Macroeconomic Data GDP in Current Implicit price deflator GDP in real or 1982 dollars (billions) dollars (billions) 1,215.5 1,312.6 1,359.3 1,472.8 1,882.8 1,990.5 44.0 46.4 3,417.8 2,483.6 4,608.2 2,746.1 54.0 59.3 5,695.4 2,825.3 67.3 75.2 78.8 Population (millions) GDP per capita 1982 dollars 205.1 207.7 209.9 11,788 12,426 12,959 213.9 216.0 12,960 220.2 3,115.9 3,183.0 3,151.1 2,732.0 12,998 225.1 13,839 (25)Which of the following is the GDP in current dollars in 1975 in Table#2 above? (a)$31,265.7b (b)$2,343.2b (c)$3,377.4b (d)$6,876.4b (26)Which of the following is the GDP expressed in constant dollars in 1973 in Table#2 above? (a)$3,654.4 (b)$1,359.3 (c)$2,746.1 (d)$3,151.1 (27)Which of the following is the GDP deflator in 1971 in Table#2 above? (a)76.4 (b)68.8 (c)46.4 (d)None of the above (28)Suppose in 1995, the nominal GDP of China was $5,744 billion and the GDP deflator was 140. China’s GDP expressed in constant dollars in 1996 is: (a)$5,376b (b)$4,103b (c)$6,286b (d)None of the above (29)Which of the following statements about nominal export earnings is true? (a)They are adjusted for inflation (b)They are not adjusted for inflation (c)Their dollar value is less than the dollar value of real exports (d)None of the above (30)Suppose you are told that the GDP Deflator in an economy for 1998 was 180 and its GDP Deflator in 2010 was 220, what was the rate of inflation for the economy over the years 1998-2010? (a)26 percent (b)19 percent (c)More information needed (d)None of the above (31)Which of the following pairs of countries is classified as a newly industrialized nation? (a)South Africa and Albania (b)South Korea and Brazil (c)Peru and Taiwan (d)None of the above (32)Economic development in any society encompasses: (a)Distribution of income (b)Legal system (c)Education (d)All of the above (33)Suppose the rate of GDP growth expressed in constant dollars is 8.4 percent annually and the rate of population growth is 5.2 percent annually during the period 1990-2005, then the rate of constant GDP per capita growth during the cited period is: 4 (a)1.2 percent (b)3.2 percent (c)2.2 percentp (d)More information needed (34)According to the Rule of 70, the rate of real GDP growth for the economy referenced inQ#33 will take ____________________to double. (a)6.3 years (b)8.3 years (c)9.5 years (d)22 years (35)Which of the following statements is true? The international trade policy known as protectionism is: (a)A policy tool for development in and developing countries (b)Employed by governments to protect young industries from foreign competition (c)An explicitly anti-free trade development policy (d)All of the above (36)Which of the following statements is true The development strategy known as EOI is: (a)A pro-free trade industrial policy (b)A free market industrial policy (c)A protectionist industrial policy (d)An anti-growth strategy (37)Which of the following statements is false? The theory of comparative advantage is: (a)A 17th century international trade theory (b)A trade theory based on specialization of production due to relative cost advantage (c)A trade theory that was developed by the English political economist David Ricardo (d)None of the above (38)Which of the following statements is false? The US and Britain were able to achieve relatively rapid industrial development because of: (a)Anti-free trade industrial policies (b)Strong protectionist policies (c)Strong interventionist fiscal policies such as subsidies and tax breaks for investors (d)All of the above (39)Which of the following statements is false? A quota is known as a: (a)An anti-free trade growth and development policy (b)Quantitative restriction on imports of a good (c)A non-tariff barrier (d)None of the above (40)The GDP expressed in current dollars in 1973 and 1989 is ______________ and _____________given that the CPI in 1973 is 140 and 160 in 1989. (a)$8246b and $7864b (b)$7456b and $6438b (c)$1103b and $1352b (d)$1435b and $2253b Table#3-Disposable Income, Consumption and Savings Data Disposable Income or (Yd) Consumption or (C) $0 $ 500 14,500 18,650 24,785 32,596 36,768 0 Saving or (S) $ -1200 850 48,655 (41)Which of the following is consumption spending for the household in Table#3 above when saving is -$1200? (a)$13,300 (b)$16,700 (c)More information needed (d)None of the above 5 (42)Suppose 50 percent of the household’s disposable income shown in the 5 th row in Table#3 above represents consumption expenditures, it would be plausible to conclude that consumption expenditures are: (a)$14,785 and savings are $7436 (b)$16,856 and savings are $9,654 (c)$14,771 and savings are $9,914 (d)None of the above (43)Would the trade-off between consumption expenditures and savings cited in the household in Q#42 above favor saving or consumption? (a)Savings (b)Consumption (c)Neither savings nor consumption (d)More information needed to respond (44)Which of the following statements is false? The aggregate consumption expenditures of a country’s GDP is made up of: (a)Business investment expenditures (b)Durable consumption expenditures (c)Services expenditures (d)None of the above (45)Which of the following statements is true? GDP@market price: (a)Includes subsidies and excludes indirect taxes (b)Excludes subsidies and includes indirect taxes (c)Includes both subsidies and indirect taxes (d)None of the above (46)Suppose a country’s GDP@factor cost is equal to $680b, subsidies=$45b, indirect taxes=$15b and its capital consumption allowances=$85b, what is the NDP@market price of the country? (a)$650b (b)$565b (c)More information needed (d)None of the above (47)Which of the following statements is false? (a)NDP@market price excludes subsidies and includes indirect taxes (b)The rate of investment is equal to $gross investment\$GDP x 100 (c)Price indices measure the average movement of prices in an economy (d)None of the above (48)Which of the following statements about subsidies is false? (a)They are government expenditures that are used to defray the costs of production of specific firms, industries and consumer prices (b)They are also known as negative taxes in an economy (c)They are included in the calculation of a nation’s GDP at market price and NDP at market price (d)Any of the above (49)Which of the following statements about a nation’s real GDP is false? (a)The real GDP is the inflation-adjusted GDP (b)The real GDP is the GDP not adjusted for inflation (c)The real GDP is equal to nominal GDP divided by GDP Deflator x100 (d)(a) and (c) only (50)If an economy’s population grows at 3 percent and real GDP grows at 4 percent on average during 1985-1995: (a)Per capita real GDP is increasing (b)Per capita real GDP is constant (c)Per capita real GDP is decreasing (d)The economy’s standard of living is rising (51)The phase of the business cycle that follows the phase of a downturn is__________________ (a)The recovery phase (b)The peak phase (c)The trough phase (d)None of the above (52)A tariff has the effect of granting_____ _______________________________a larger share of the domestic market. (a)Domestic consumers (b)Foreign producers (c)Domestic producers (d)Foreign consumers 6 (53)Which of the following statements is false? A shift to the left in the PPF curve of a country’s economy mean that there is: (a)A contraction in the economy (b)The possibility that development is unfolding in the economy (c)The evolution of the backward-forward linkages within the economy (d)None of the above (54)Development is feasible in the absence of growth in a society is: (a)A false statement because growth is a sufficient condition for development (b)A true statement because growth is a necessary and sufficient condition for development (c)A true statement because growth is a necessary though not a sufficient condition for development (d)None of the above (55)Which of the following statements is true? A pair of protectionist policy is: (a)Tariffs and customs delays (b)Exchange controls and quotas (c)(a) and (b) above (d)All of the above (56)Which of the following pairs of countries is classified as gang of four nations? (a)Singapore and Taiwan (b)South Korea and India (c)Peru and Taiwan (d)Russia and Ghana (57)Suppose the real GDP of the economy of Macklandia is given to you as being equal to $450 billion in 1998 and it’s given to you as $385 billion in 2005, what is the growth real of real GDP per capita during the years 1998-2005 for Macklandia: (a)5.3 percent (b)2.9 percent (c)6.2 percentp (d)More information needed (58)Would you be able to calculate Macklandia’s GDP growth rate with the information given in Q#57 above? (a)No (b)Yes (c)More information needed (d)All of the above (59)What is the GDP growth rate of Macklandia during the period 1998-2005? (a)6.4 percent (b)8.3 percent (c)3.6 percent (d)None of the above (60)Which of the following statements is true? Payments to households not in exchange for goods and services currently produced are: (a)Disposable incomes (b)Transfer payments (c)Undistributed corporate profits (d)Net interest payments EXTRA CREDIT QUESTIONS-OPTIONAL (61)Which of the following statements is false? Customs delays are known as a: (a)An anti-free trade growth and development policy (b)Quantitative restriction on imports of a good (c)A non-tariff barrier (d)All of the above (62)Which of the following pairs of economists are classical economists? (a)David Ricardo and Joseph Stiglitz (b)Norman Girvan and Paul Krugman (c)John Stuart Mills and Robert Malthus (d)Michael Hudson and Larry Summers (63)Which of the following pairs is an intellectual property rights? (a)Free markets and central planning (b)Copyrights and free trade 7 (c)Patents and trademarks (d)Software and trade secrets (64)Which of the following statements is false? The development strategy known as export-oriented industrialization is known as: (a)A pro-growth policy (b)A pro-industrialization policy (c)A protectionist industrial policy (d)None of the above (65)Which of the following pairs of countries belongs to the bloc of nations known as the BRICS? (a)Britain and Ireland (b)Russia and South Korea (c)Brazil and South Africa (d)Germany and India (66)The combination of frictional and structural unemployment in a nation’s labor force is called the------------------(a)Civilian rate of unemployment (b)Natural rate of unemployment (c)Transitional rate of unemployment (d)Voluntary unemployment (67)Suppose the number of people who are unemployed in a country’s labor force is 8 million persons and the number of people in the country’s labor force is 60 million, which of the following is the rate of unemployment in the country’s labor force? (a)8 percent (b)10 percent (c)13 percent (d)20 percent (68)Which of the following represents the rate of underemployment if you are told that 5 million persons in the labor force in Q#67 are underemployed? (a)4 percent (b)8 percent (c)25 percent (d)Any of the above (69)Sydney, a brilliant Ph.D candidate in software engineering, has turned down several job offers because he hopes eventually to do research at one of the leading universities in his field. The type of unemployment Sydney experiences is: (a)Seasonal (b)Cyclical (c)Structural (d)None of the above (70)Miriam Lembaba, who works in a candle factory, becomes unemployed because more people are buying electric lighting systems instead of candles. Susan can best be described as: (a)Frictionally unemployed (b)Cyclically unemployed (c)Structurally unemployed (d)Seasonally unemployed (71)Evadney Watson, a housewife in Atlanta, Georgia, who claims on a BLS survey that she is neither gainfully employed nor looking for work, is, according to the BLS, (a)Is counted as retired (b)Is counted as unemployed (c)Is counted as self-employed (d)None of the above (72)A person who voluntarily quits her job in Los Angeles and expects to get a similar job in Washington DC is an example of: (a)Cyclical unemployment (b)Frictional unemployment (c)Structural unemployment (d)Seasonal unemployment (73)Consider a broom factory that closes permanently because of foreign competition. If the broom factory workers are unable to find new jobs because their skills are no longer marketable, then they are classified as: (a)Voluntary unemployed (b)Technologically unemployed (c)Structural unemployed (d)Cyclical unemployed 8 (74)A marginalized worker is one who---------------------------------(a)Has very little skills (b)Is underemployed (c)Is permanently left out of the labor force (d)None of the above (75)Suppose an economy is made up of 100 million people, 60 million of whom have jobs, 10 million of who are looking for jobs, and 15 million of whom are retired. The number of people in the civilian labor force is: (a)30 million (b)60 million (c)70 million (d)85 million (76)Which of the following types of unemployment results when workers are willing to work at a prevailing wage rate though firms are unwilling to employ all of them at that wage rate? (a)Cyclical (b)Involuntary (c)Seasonal (d)Voluntary (77)Christopher is a musician who is out of work because increasingly electronic equipment is replacing live musicians at various gigs. This is an example of: (a)Frictional unemployment (b)Technological unemployment (c)Natural rate of unemployment (d)Cyclical unemployment (78)If the PPI in 1980 was 160 and the PPI for 1985 was 250, the rate of inflation was: (a)25 percent (b)35 percent (c)18 percent (d)None of the above (79)Which of the following statements is true? The rate of inflation calculated in Q#78 above measures: (a)Inflation in the whole economy of a country (b)Inflation in producers’ prices (c)Inflation in wholesale prices (d)None of the above (80)Which of the following policy according to Keynes is best suited to stimulate an economy that is experiencing a downturn in the business cycle? (a)A contractionary monetary policy (b)A contractionary fiscal policy (c)An expansionary fiscal policy (d)An expansionary monetary policy 9
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