Eco 212 Final Exam

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This pack of ECO 212 Final Exam consists of: ECO 212 ECO212 Final Exam A 1)Economics does not study correct or incorrect behaviors, but rather it assumes that economic agents make the best decisions given their knowledge of the costs and benefits. What term best describes this behavior? 2) By definition, what is economics the study of? 3) What is the term in economics by which a group of buyers and sellers of a product come together to trade? 4) Which of the following statements describes the actions of producers in the circular flow model? 5) If a commercial dairy farm wants to raise funds to purchase feeding troughs, in which market does it do so? 6) Which of the following is not a critical function of the government in facilitating the operation of a market economy? 7) If demand is inelastic, the absolute value of the price elasticity of demand is 8) Economists in general 9) A demand curve which is ________ represents perfectly inelastic demand, and a demand curve which is ________ represents inelastic demand. 10) A decrease in the price of GPS systems will result in 11) At a product's equilibrium price 12) If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until 13) Marginal revenue product of labor for a competitive seller is 14) Let MP = marginal product, P = output price, and W = wage, then the equation that represents the condition where a competitive firm would hire another worker is 15) Marginal revenue product for a perfectly competitive seller is equal to 16) An individual's labor supply curve shows 17) A firm's demand for labor curve is also called its 18) A decrease in the wage rate causes 19) Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption? 20) Which of the following is an example of a quasi-public good? 21) Which of the following displays these two characteristics: rivalry and nonexcludability? 22) A monopoly is a seller of a product 23) The labor supply for an industry would decrease if 24) A characteristic found only in oligopolies is 25) The Philippines and Vietnam have roughly the same size population. Suppose the GDP of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion. You should conclude 26) Gross domestic product understates the total production of final goods and services because of the omission of 27) Gross domestic product is calculated by summing up 28) Fiscal policy refers to changes in 29) If the economy is slipping into a recession, which of the following would be an appropriate fiscal policy? 30) Which of the following is an objective of fiscal policy? 31) Which of the following assets is most liquid? 32) If credit card balances rise in the economy, then M1 will ________ and M2 will ________. 33) Economists estimate that ________ of U.S. currency is outside the United States and held primarily by ________. 34) The M2 measure of the money supply equals 35) The M1 measure of the money supply equals 36) Which of the following is one of the most important benefits of money in an economy? 37) Open market operations refer to the purchase or sale of ________ to control the money supply. 38) Which of the following determines the amount of money the banking system as a whole can create? 39) Money market mutual funds sell shares to investors and use the money to buy 40) The goals of monetary policy tend to be interrelated. For example, when the Fed pursues the goal of ________, it also can achieve the goal of ________ simultaneously. 41) The Federal Reserve System's four monetary policy goals are 42) The Federal Reserve's two main ________ are the money supply and the interest rate. 43) Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except 44) Table 2-3 Serena Haley Bracelets 8 9 Necklaces 16 12 Refer to Table 2-3. Which of the following statements is true? 45) Table 2-3 Serena Haley Bracelets 8 9 Necklaces 16 12 Refer to Table 2-3. What is Haley's opportunity cost of making a bracelet? 46) How does an increase in a country's exchange rate affect its balance of trade? 47) For each bottle of wine that Italy produces, it gives up the opportunity to make 10 pounds of cheese. France can produce 1 bottle of wine for every 25 pounds of cheese it produces. Which of the following is true about the comparative advantage between the two countries? 48) When the market value of the dollar rises relative to other currencies around the world, we say that 49) If the dollar appreciates against the Mexican peso, 50) If the purchasing power of the dollar is greater than the purchasing power of the euro, purchasing power parity predicts that the exchange rate will 51) If interest rates in the United States rise 52) The three most important international financial centers today are 53) China has been accused of deliberately undervaluing its currency, the yuan, in order to 54) What two countries each accounted for more than 25% of all foreign purchases of U.S. stocks and bonds in 2008? ECO 212 ECO212 Final Exam B 1) Economics does not study correct or incorrect behaviors, but rather it assumes that economic agents make the best decisions given their knowledge of the costs and benefits. What term best describes this behavior? 2) What is the term in economics by which a group of buyers and sellers of a product come together to trade? 3) Why do consumers have to make tradeoffs in deciding what to consume? 4) What might you call an outward shift of a nation's production possibilities frontier? 5) Which of the following is not a critical function of the government in facilitating the operation of a market economy? 6) Which of the following is an example of spending on goods and services in the circular flow model? 7) A demand curve which is ________ represents perfectly inelastic demand, and a demand curve which is ________ represents inelastic demand. 8) Suppose the value of the price elasticity of demand is -3. What does this mean? 9) Price elasticity of demand measures 10) Danielle Ocean pays for monthly pool maintenance for her home swimming pool. Last week the owner of the pool service informed Danielle that he will have to raise his monthly service fee because of increases in the price of pool chemicals. How is the market for pool maintenance services affected by this? 11) At a product's equilibrium price 12) Which of the following is the correct way to describe equilibrium in a market? 13) Let MP = marginal product, P = output price, and W = wage, then the equation that represents the condition where a competitive firm would hire another worker is 14) Marginal revenue product of labor for a competitive seller is 15) Firms use information on labor's marginal revenue product to determine 16) A decrease in the wage rate causes 17) How will an increase in population affect the labor market? 18) An individual's labor supply curve shows 19) Private costs 20) Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption? 21) Which of the following is an example of a common resource? 22) The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because 23) A characteristic found only in oligopolies is 24) A monopoly is a seller of a product 25) Gross domestic product is calculated by summing up 26) Which of the following goods is directly counted in GDP? 27) The Philippines and Vietnam have roughly the same size population. Suppose the GDP of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion. You should conclude 28) If the economy is slipping into a recession, which of the following would be an appropriate fiscal policy? 29) Which of the following is an objective of fiscal policy? 30) Fiscal policy refers to changes in 31) In economics, money is defined as 32) Dollar bills in the modern economy serve as money because 33) If credit card balances rise in the economy, then M1 will ________ and M2 will ________. 34) Dollar bills in the modern economy serve as money because 35) Which of the following functions of money would be violated if inflation were high? 36) In an economy with ________, there are more prices than in an economy with ________. 37) If the central bank can act as a lender of last resort during a banking panic, banks can 38) Which of the following determines the amount of money the banking system as a whole can create? 39) To offset the effect of households and firms deciding to hold less of their money in checking account deposits and more in currency, the Federal Reserve could 40) If the probability of losing your job remains ________, a recession would be a good time to purchase a home because the Fed usually ________ interest rates during this time. 41) Toll Brothers, a residential home builder, did well during the recession in 2001 but did not do so well in 2007 after the housing bubble burst. The reason for this is 42) The goals of monetary policy tend to be interrelated. For example, when the Fed pursues the goal of ________, it also can achieve the goal of ________ simultaneously. 43) Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except 44) Table 2-3 Refer to Table 2-3. What is Haley's opportunity cost of making a bracelet? 45) For each bottle of wine that Italy produces, it gives up the opportunity to make 10 pounds of cheese. France can produce 1 bottle of wine for every 25 pounds of cheese it produces. Which of the following is true about the comparative advantage between the two countries? 46) How does an increase in a country's exchange rate affect its balance of trade? 47) If there is currently a surplus of dollars, which of the following would you expect to see in the foreign exchange market? 48) If the dollar appreciates against the Mexican peso, 49) If relative purchasing power between the United States and Argentina is 3.22 pesos per dollar, under which circumstances would we say that the dollar is "overvalued"? 50) If the purchasing power of the dollar is greater than the purchasing power of the euro, purchasing power parity predicts that the exchange rate will 51) You decide to work in Japan for the next 10 years, accumulate some savings, then move back to the United States and convert your savings from yen to dollars. At the time of your move, economists predict that consumers in the United States have reignited their love of Japanese products, especially hybrid cars, and expect that this strong preference for Japanese products will continue for the next decade. How should this influence your decision to work and save in Japan? 52) If interest rates in the United States rise, 53) China has been accused of deliberately undervaluing its currency, the yuan, in order to 54) What two countries each accounted for more than 25% of all foreign purchases of U.S. stocks and bonds in 2008? ECO 212 ECO212 Final Exam C 1) The decision of which assumptions to make is 2) Economic models 3) When studying the effects of public policy changes, economists 4) A competitive market is a market in which 5) In a market economy, 6) Which of the following statements is correct? 7) If a decrease in income increases the demand for a good, then the good is 8) A likely example of substitute goods for most people would be 9) Economists in general 10) A decrease in input costs to firms in a market will result in 11) Another term for equilibrium price is 12) The unique point at which the supply and demand curves intersect is called 13) The marginal product of labor is equal to the 14) When a firm's only variable input is labor, then the slope of the production function measures the 15) On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product? 16) A Luddite would be expected to fear 17) The term Luddite is used to describe 18) Suppose that a new invention decreases the marginal productivity of labor, shifting labor demand to the left. Such an invention would be an example of 20) The typical firm in the U. S. economy 21) In which of the following markets is economic profit driven to zero in the long run? 22) A firm in a monopolistically competitive market is similar to a monopolist in the sense that it 23) The U.S. market for locomotives is divided between two producers: General Electric has 70 percent of the market and General Motors has 30 percent. This market is an example of 24) The commercial jetliner industry, consisting of Boeing and Airbus, would best be described as a (an) 25) For an economy as a whole 26) Which of the following newspaper headlines would be more closely related to what microeconomists study than to what macroeconomists study? 27) Gross domestic product serves as a measure of two things: 28) Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift 29) When production costs rise, 30) Stagflation exists when prices 31) One determinant of the long-run average unemployment rate is the 32) Closely watched indicators such as the inflation rate and unemployment are released each month by the 33) If policymakers increase aggregate demand, the price level 34) Which of the following statements about U.S. inflation is NOT correct 35. Economists all agree that 36. Which of the following concerning the history of U.S. inflation is NOT correct? 37. Nominal GDP measures 38) Economic variables whose values are measured in monetary units are called 39) According to the classical dichotomy, which of the following is influenced by monetary factors? 40) According to the classical dichotomy, which of the following is NOT influenced by monetary factors? 41) Changes in nominal variables are determined mostly by the quantity of money and the monetary system according to 42) According to the classical dichotomy, when the money supply doubles, which of the following also double? 43) For any country, if the world price of computers is higher than the domestic price of computers without trade, that country should 44) The price of a good that prevails in a world market is called the 45) The price of cotton that prevails in international markets is called the 46) Outflow represents the quantity of dollars 47) The open-economy macroeconomic model includes 48) The open-economy macroeconomic model examines the determination of 49) The before-trade price of fish in Greece is $3.00 per pound. The world price of fish is $5.00 per pound. Greece is a price-taker in the fish market. If Greece begins to allow trade in fish, its consumers of fish will become 50) The before-trade price of fish in Greece is $3.00 per pound. The world price of fish is $5.00 per pound. Greece is a price-taker in the fish market. If Greece allows trade in fish, then Greece will become an 51) With which of the Ten Principles of Economics is the study of international trade most closely connected? 52) Which of the following statements is true? 53) Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. Which groups in Aquilonia are better off as a result of the new free-trade policy? 54) Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. We can conclude that producer surplus in Aquilonia is now

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General Questions - General General Questions ECO 212 final exam version 6 1) Which of the following issues is an application of using macroeconomics to make a real world decision? A. Whether a company should increase its worker benefits B. Whether this year's enrollment will increase for University of Phoenix. C. Whether the growth rate of the Chinese economy will exceed 10% in 2010 D. Whether workers should choose to remain in a factory 2) The forces that make market economies work are A. work and leisure B. demand and supply C. regulation and restraint D. taxes and government spending 3) A market is a A. group of buyers and sellers of a particular good or service B. group of people with common economic characteristics C. place where buyers and sellers come together to engage in trade D. place where an auctioneer helps set prices and arrange sales 4) If a decrease in income increases the demand for a good, then the good is A. a substitute good B. a complement good C. a normal good D. an inferior good 5) Two goods are substitutes if a decrease in the price of one good A. decreases the demand for the other good B. decreases the quantity demanded of the other good C. increases the demand for the other good D. increases the quantity demanded of the other good 6) A likely example of substitute goods for most people would be A. peanut butter and jelly B. tennis balls and tennis rackets C. televisions and subscriptions to cable television services D. pencils and pens 7) Another term for equilibrium price is A. dynamic price B. market-clearing price C. quantity-defining price D. satisfactory price 8) If, at the current price, there is a shortage of a good, A. sellers are producing more than buyers wish to buy B. the market must be in equilibrium C. the price is below the equilibrium price D. quantity demanded equals quantity supplied 9) If there is suddenly an increase in population in North Carolina, then the average wage for North Carolina will A. decrease because the supply of labor increases B. increase because the supply of labor increases C. decrease because the demand of labor increases D. increase because the demand of labor increases 10) The marginal product of labor is equal to the A. incremental cost associated with a one unit increase in labor B. incremental profit associated with a one unit increase in labor C. increase in labor necessary to generate a one unit increase in output D. increase in output obtained from a one unit increase in labor 11) When we focus on the firm as a supplier of a good or a service, we assume that the firm is a profit maximizer. When we focus on the firm as a demander of labor, we assume that the firm's objective is to A. minimize wages B. minimize variable costs C. maximize the number of workers hired D. maximize profit 12) What are the two types of imperfectly competitive markets? A. Monopoly and monopolistic competition B. Monopoly and oligopoly C. Monopolistic competition and oligopoly D. Monopolistic competition and cartels 13) Monopolistically competitive firms are typically characterized by A. many firms selling products that are similar, but not identical B. many firms selling identical products C. a few firms selling products that are similar, but not identical D. a few firms selling highly different products 14) The commercial jetliner industry, consisting of Boeing and Airbus, would best be described as a (an) A. perfectly competitive market B. monopolistically competitive market C. oligopoly D. monopoly 15) Imperfectly competitive firms are characterized by A. horizontal demand curves B. standardized products C. a large number of small firms D. price making ability 16) Gross domestic product serves as a measure of two things: A. the total spending of everyone in the economy and the total saving of everyone in the economy B. the total income of everyone in the economy and the total expenditure on the nation's output of goods and services C. the value of the nation's output of goods and services for domestic citizens and the value of the nation's output of goods and services for the rest of the world D. the nation's saving and the nation's investment 17) Which of the following newspaper headlines would be more closely related to what microeconomists study than to what macroeconomists study? A. Unemployment rate rises from 5 percent to 5.5 percent. B. Real GDP grows by 3.1 percent in the third quarter. C. Retail sales at stores show large gains. D. The price of oranges rises after an early frost 18) A fiscal policy can be A. an increase of federal government spending financed by the treasury B. a sale of bonds in an open market operation by the treasury C. a rise of reserve ratios by the Fed D. that the Fed prints money 19) Stagflation exists when prices A. and output rise B. rise and output falls C. fall and output rises D. and output fall 20) An expansionary fiscal policy will A. reduce unemployment and increase GDP B. reduce unemployment and decrease GDP C. increase unemployment and increase GDP D. increase unemployment and decrease GDP 21) If money is used as a mechanism to hold purchasing power for a period of time, it is functioning as a A. medium of exchange B. store of value C. unit of account D. standard of value 22) Inflation can be measured by the A. change in the consumer price index B. percentage change in the consumer price index C. percentage change in the price of a specific commodity D. change in the price of a specific commodity 23) Given the following information about AAA bank: Bank Deposits $100,000 Loans $50,000 Required Reserves $20,000 Excess Reserves $30,000 What is the reserve ratio set by the Federal Reserve Bank? A. 10 percent B. 20 percent C. 30 percent D. 50 percent 24) Sally sells 40 bags of lettuce for a total of $80 at the farmers’ market. A. The $80 is a real variable. The quantity of lettuce is a nominal variable. B. The $80 is a nominal variable. The quantity of lettuce is a real variable. C. Both the $80 and the quantity of lettuce are nominal variables. D. Both the $80 and the quantity of lettuce are real variables. 25) Monetary neutrality implies that an increase in the quantity of money will A. increase employment B. increase the price level C. increase the incentive to save D. not increase any of the above 26) For any country, if the world price of computers is higher than the domestic price of computers without trade, that country should A. export computers, since that country has a comparative advantage in computers B. import computers, since that country has a comparative advantage in computers C. neither export nor import computers, since that country cannot gain from trade D. neither export nor import computers, since that country already produces computers at a low cost compared to other countries 27) Outflow represents the quantity of dollars A. supplied for the purpose of selling assets domestically B. supplied for the purpose of buying assets abroad C. demanded for the purpose of buying U.S. net exports of goods and services D. demanded for the purpose of importing foreign goods and services 28) In the open economy macroeconomic model, net capital outflow is equal to the quantity of A. dollars supplied in the foreign exchange market B. dollars demand in the foreign exchange market C. funds supplied in the loanable funds market D. funds demanded in the loanable funds market 29) A tariff on a product A. enhances the economic well-being of the domestic economy B. increases the domestic quantity supplied C. increases the domestic quantity demanded D. results in an increase in producer surplus that is greater than the resulting decrease in consumer surplus 30) Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. Which groups in Aquilonia are better off as a result of the new free-trade policy? A. Producers of incense and consumers of steel B. Consumers of all three goods C. Consumers of incense and producers of rugs D. Producers of steel and consumers of incense

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You can save some cash by not purchasing your school books until after class has started. Sometimes, the "required" book is not really needed. This happens a lot when you're taking online classes. You can often earn good grades by using nothing more than online resources and lecture notes.