ECON 1000 (Summer 2018 Section 02) Exam #2A

Transcription

1 ECON 1000 (Summer 2018 Section 02) Exam #2A Multiple Choice Questions: (3 points each) 1. I am taking of the exam. A. Version A 2. Lower income countries which are held back by some combination of poor economic institutions, undeveloped industrial capital, and/or an uneducated or unskilled workforce (e.g., India, Ghana, Bangladesh, and the Democratic Republic of the Congo) are referred to as A. Economically Inferior Countries. B. Industrially Advanced Countries. C. Less Developed Countries. D. Over Developed Countries. 3. Deadweight Loss refers to A. the difference between maximum possible Total Social Surplus and realized Total Social Surplus. B. the profits that firms make in a free market economy. C. the burden that consumers incur from having to pay for goods, instead of being given the goods for free. D. the negative impact of foreign trade on our economy. 4. A good is non-rival if A. consumption by one person does diminish the quantity/quality of consumption by others. B. consumption by one person does not diminish the quantity/quality of consumption by others. C. it is difficult (or very costly) to prevent consumption by those who do not pay for the good. D. it is easy (or relatively costless) to prevent consumption by those who do not pay for the good. 5. Consider two countries that each have a Per Capita GDP of $5,000 in Country A realizes a constant 12% increase in Per Capita GDP each year, while Country B realizes a constant 8% increase in Per Capita GDP each year. Given these constant rates of increase, in 2036 (i.e., 18 years in the future), Per Capita GDP will be approximately A. $40,000 in Country A and $20,000 in Country B. B. $15,000 in Country A and $10,000 in Country B. C. $10,800 in Country A and $7,200 in Country B. D. $5,600 in Country A and $5,400 in Country B. 6. Ilan Moschidae owns Nikola Motors, a company that produces electric cars. He has exploited his political connections in order to get legislators in his state to give Nikola Motors an interest free loan to build a new factory. This appears to be an example of A. the Brain Drain. B. Rule-of-Law. C. Crony Capitalism. D. market provision of a Public Good.

2 7. Per Capita GDP of the United States is approximately $56,300. In comparison, the value of Per Capita GDP for the European Union as a whole is approximately. A. $15,600 B. $37,800 C. $57,250 D. $69, Which of the following statements is correct? A. A win-win outcome will always be realized in a positive-sum environment. B. A win-lose outcome could possibly be realized in either a positive-sum, zero-sum, or negative-sum environment. C. A win-win outcome can only ever be realized in a negative-sum environment. D. More than one (perhaps all) of the above statements are correct. 9. Consider a market in which the efficient level of trade is 12,500 units. Deadweight Loss would be positive if units were traded. A. 0. B. 8,250. C. 17,750. D. More than one (perhaps all) of the above statements are correct. 10. In 2008 Zimbabwe experienced an annual inflation rate of 12,563%. This is an example of A. the Rule of 72. B. Hyperinflation. C. the Brain Drain. D. Capital Flight. 11. Government Spending as a Percentage of GDP in the United States is projected to A. decrease to less than 25% by B. remain at roughly 40% for the next several years. C. increase to roughly 55% by D. None of the above answers are correct. For questions 12 and 13, consider a society with an adult population categorized as follows: Type A Type B Type C Type D Do you currently have a job? Yes Yes No No Are you currently seeking a job? No Yes Yes No Number of People of this type 3,000, , ,000 1,000, There are people in the labor force of this society. A. 3,000,000 B. 3,800,000 C. 4,000,000 D. 5,000, This society s Unemployment Rate is. A. 25% B. 20% C. 5% D. 4%

3 14. For the United States, the value of Real GDP Per Capita was in 2015 than in A. 8.3 times larger B times larger C times larger D. 12.6% smaller For Questions 15 through 18, consider a monopolist facing Demand and with Marginal Costs and Marginal Revenue as illustrated below. $ a b Marginal Costs of Production c d e f g Demand ,400 Marginal 2,525 3,280 Revenue 15. The efficient level of output for this good is units. A. 4,850 B. 3,280 C. 2,525 D. 1,400 4,850 quantity 16. To maximize profit, this monopolist would sell and charge a price of. A. 1,400 units of output; $16.25 per unit. B. 1,400 units of output; $7.10 per unit. C. 2,525 units of output; $11.15 per unit. D. 3,280 units of output; $7.10 per unit. 17. When the monopolist chooses the price and quantity which maximizes profit, Deadweight Loss is A. equal to areas (a)+(b). B. equal to areas (e)+(f). C. equal to area (g). D. equal to zero. 18. If the government were to mandate that the monopolist must charge a price of $11.15 per unit and sell all units that people want to buy at this price, then A. there would be a positive Deadweight Loss due to too much trade. B. Total Consumers Surplus would be equal to areas (a)+(b)+(c)+(d)+(e). C. Total Producers Surplus (i.e., Monopoly Surplus) would be zero. D. None of the above answers are correct.

4 19. As discussed in lecture, society can achieve economic growth by A. implementing policies which would provide incentives for fewer people to enter the labor force. B. making deliberate investments in overhead capital. C. replacing market based economic institutions with mechanisms of command planning. D. More than one (perhaps all) of the above answers is correct. 20. Looking at GDP Growth Rates around the World over the entire time-period from 1970 through 2014, it was noted that South Korea grew at an average rate of 7.19% and the World as a whole grew at an average rate of 3.06% over this time. In contrast, the European Union as a whole grew at an average rate of. A. 2.26% B. 4.66% C. 9.29% A. 1.54% (i.e., negative 1.54%) 21. Government spending as a percentage of GDP is smallest in which of the following countries? A. Hong Kong B. France C. The United States D. The United Kingdom 22. is defined as a measure of the net gains to society from a trade, equal to the summation of the individual gains (or losses) from the trade over all members of society. A. Consumer s Surplus B. Producer s Surplus C. Social Surplus D. Government Surplus 23. The refers to attempts by government to minimize fluctuations in overall macroeconomic activity. A. Allocation Function of Government B. Distribution Function of Government C. Stabilization Function of Government D. Taxation Function of Government 24. The highest unemployment rate realized in the United States since January 2000 was a rate of A. 3.6% in March B. 5.2% in August C. 10.0% in October D. 15.4% in November Kristen lives near a theme park that has a fireworks display every Friday evening. From the balcony of her apartment she can watch the fireworks for free. The theme park cannot prevent her from doing this, but her enjoyment of the fireworks display does not detract from the enjoyment realized by paying park guests. Thus, the fireworks display is non-excludable and non-rival in consumption, and is therefore best described as a good. A. Public B. Private C. Club D. Common

5 26. Consider a country with exports of $425 million and imports of $545 million. It follows that this country has net exports of. A. $ 120 million (i.e., negative $120 million). B. $120 million C. $970 million. D. approximately The Expanded Circular Flow Diagram differs from the Basic Circular Flow Diagram by A. adding an illustration of the role of government and international trade. B. adding an illustration of the role of firms with market power. C. adding an illustration of the role of government, but eliminating the illustration of the role of households and firms. D. adding an illustration of the role of international trade, but eliminating the illustration of the role of domestic markets. 28. The Great Misery refers to the period of time A. from November 1973 through June 1983 when the sum of the unemployment rate and inflation rate was or higher for 116 consecutive months. B. when Bill Clinton was initially President, when the GDP growth rate was negative for 26 consecutive quarters (i.e., six and a half straight years). C. in the early 2000s when the U.S. experienced a negative inflation rate for 34 straight months between April 2003 and January D. when Donald Trump was initially President, when the value of the Dow Jones Industrial Average decreased in value by 31.7% in less than two months. For Questions 29 and 30, consider the potential provision of a pure public good (that can be produced in three different levels: low, medium, or high) in a three person society (consisting of Amy, Brad, and Carl). The table below provides a summary of Total Costs and individual benefits from different levels of provision of this pure public good. Zero Provision Low Provision Medium Provision High Provision Total Costs $0 $900 $2,400 $4,500 Amy s Total Benefits $0 $500 $1,300 $2,000 Brad s Total Benefits $0 $400 $1,100 $1,400 Carl s Total Benefits $0 $300 $1,200 $2, The efficient level (i.e., Social Surplus maximizing level) of provision of this public good is A. High Provision B. Medium Provision C. Low Provision D. Zero Provision 30. Suppose the government chose to provide High Provision of the public good and then imposed mandatory taxes of $1,500 on each person to exactly cover the costs of providing this amount of the public good. In comparison to Zero Provision, this would be A. a win-win outcome in a positive-sum environment. B. a win-lose outcome in a positive-sum environment. C. a win-lose outcome in a zero-sum environment. D. a win-lose outcome in a negative-sum environment.

6 31. The vicious-cycle-of-poverty A. is apparently true, since every country that was poor a century ago is still poor today. B. has no merit whatsoever, since even poor societies typically have an overabundance of financial capital. C. suggests that poverty is self-perpetuating, because poor countries do not have sufficient resources available to make the investments in capital which are necessary for economic growth. D. explains why firms with market power will produce less than the efficient amount of output. 32. Gross Domestic Product can be expressed by the following formula:. A. Y = C + I + G + NX B. Y = MX + B C. Y = (C)(I) + (G)(NX) D. Y = (C I) (G NX) 33. The refers to the logical error whereby someone incorrectly concludes that simply because there are benefits (to some people) from higher levels of an activity, that more of the activity is always better. A. Invisible Hand B. Brain Drain C. Open-Ended Fallacy D. Misery Index

7 (Blank Page)