1. Which one of the following would be a normative economic statement?
(a) Home prices have been increasing nationwide.
(b)The California minimum wage is$12 per hour.
(c) Americans should buy products made in the USA to boost the economy
(d) Stock prices rose to a record high in July of 2007 bu...
Econ 100 midterm #1 || 100% ACCURATE ANSWERS!!
1. Which one of the following would be a normative economic statement?
(a) Home prices have been increasing nationwide.
(b)The California minimum wage is$12 per hour.
(c) Americans should buy products made in the USA to boost the economy
(d) Stock prices rose to a record high in July of 2007 but then declined. correct answers c
2. The notion that supply creates its own demand so that the economy should not sink into a
depression reflects:
(a) Keynesian economics
(b)the economic views of Marx
(c)the economic views of Schumpeter
(d) Say's Law correct answers d
3. The idea that the level of spending determining output, employment, and income so that
depressions are possible is based on:
(a) Keynesian economics
(b) the economic views of Marx
(c)the economic views of Schumpeter
(d) Say's Law correct answers a
4. A Marxist solution to economic crisis of overproduction would be:
(a) laissez-faire or free-market policies since the economy will tend towards full
employment on its own.
(b) government stabilization through changing spending, taxes, and interest rates.
(c)a socialist economy with government ownership of banks and businesses since
economic instability is based on the exploitation of workers and reinvestment of profits.
(d)allowing business to go bust since to clear the ground for new firms, and technology.
correct answers c
5. Which of the following expenditures is included in GDP?
(a)purchases of bread by the cafeteria on campus in order to make sandwiches.
(b)a used textbook purchased by a student
(c)financial aid received by a student
(d)a student's monthly cellular phone payment correct answers d
6. When a country's exports are greater than its imports, then:
(a)Net exports(NX)are positive and there is a trade surplus.
(b)Net exports(NX)are positive and there is a trade deficit.
(c)Net exports(NX)are negative and there is a trade surplus.
(d)Net exports(NX)are negative and there is a trade deficit. correct answers a
7. GDP can be a being a poor measure of economic well being because:
(a)GDP does not take into account changes in leisure
(b)GDP does not take into account changes in the distribution of income
(c)GDP does not take into account the impact on the environment of production
(d)all of the above. correct answers d
8. Which of the following must be subtracted from total expenditures on final goods and
, services to calculate nominal GDP?
(a)imports, they are not produced domestically
(b)inventories, since they are produced, but not actually sold so that they are not a true
expenditure.
(c) investments, since they are produced and sold, but not actually used up as is
consumption goods and government services.
(d)inflation, since this is a rise in prices and not an increase in production. correct answers a
9. Assume that there are:25 jobless workers looking for work;50 part-time workers who can't
find full-time work;425 full-time workers; and 75 full-time students who are not working and
not looking for work. Then the official unemployment rate is calculated as:
(a)(25+50)/(25+50+425)
(b)(25)/(25+425)
(c)(25+75)/(25+75+425)
(d)(25)/(25+50+425) correct answers d
10. A mismatch between the geographic location of unemployed workers and the location of
job openings would result in what type of unemployment?
(a)frictional
(b)structural
(c)cyclical
(d)seasonal correct answers b
11. At the full-employment rate of unemployment, there is only:
(a)cyclical and frictional unemployment.
(b)structural and frictional unemployment.
(c) seasonal unemployment
(d)discouraged workers" unemployment correct answers b
12. By including part-time workers who can't find full-time work, an alternative
unemployment rate will be;
(a)higher than the official rate of unemployment
(b) lower than the official rate of unemployment
(c)the same as the official rate of unemployment
(d)higher, lower, or the same depending on the number of part-time workers. correct answers
a
13. Between 1997 and 2002 there was a 75%fall the price of coffee beans, which was a
hardship for countries that export coffee, The fall in the price of imported coffee would be
most likely to show up in which U.S.price index?
(a) Gross Domestic Product Deflator(GDP Deflator)
(b)Consumer Price Index(CPI).
(c)CPl and the GDP deflator.
(d)neither the CPI nor the GDP deflator correct answers b
14. Which of the following would have contributed to more cost-push inflation in the 1990s?
(a)a drop in oil prices in 1998 following the Asian economic crisis.
(b)a fall in U.S.exports as the economic crisis spread from Asia to Russia and then to
Latin America.
(c)a boom in consumer credit and borrowing in the late 1990s.
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