ECO SP15. Chapter Review for MT3. Instructor Suabtrirat.

Transcription

1 ECO SP15 Chapter Review for MT3 Instructor Suabtrirat 1 The chapter review is an optional assignment Do it at the end of each chapter s lecture 2 Due to test bank randomization, some questions may coincide with sample or actual exam Doing them may help to improve your exam grade 3 The instructor will inform you the day that chapter s questions are discussed Answer key will be given in class and not ed to absent students without valid excuses stated in course syllabus 4 Questions are categorized by chapter The number of questions per chapter may be unequal due to test bank randomization See the table below Chapter Question Number Other things equal, relatively poor countries tend to grow a faster than relatively rich countries; this is called the catch-up effect b faster than relatively rich countries; this is called the constant-returns-to-scale effect c slower than relatively rich countries; this is called the poverty trap d slower than relatively rich countries; this is called the fall-behind effect 2 Inflation is defined as a a period of rising income in the economy b a period of rising productivity in the economy c an increase in the overall level of prices in the economy d an increase in the overall level of output in the economy 3 A nation s standard of living is determined by a the quantity of natural resources with which it is endowed b the productivity of its workers c the percentage of its GDP that is accounted for by government purchases d factors and events that are beyond the nation s control 4 Changes in the producer price index are often thought to be useful in predicting changes in a the rate of output of goods and services b the consumer price index c stock prices d the unemployment rate 5 Which of the following is included in the investment component of GDP? a John s law firm buys him a new computer b Laura buys a bond that McDonald s sells to raise funds c Elaine pays her college tuition bill Cengage Learning Testing, Powered by Cognero Page 1

2 6 What do we call financial institutions through which savers can indirectly provide funds to borrowers? a financial markets b financial intermediaries c financial institutions d stock markets 7 If a firm wants to borrow it can a supply bonds by selling them b demand bonds by buying them c supply bonds by buying them d demand bonds by selling them 8 Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants This change in behavior, by itself, has a not affected measured GDP b increased measured GDP by the value added by the restaurant s preparation and serving of the meals c reduced measured GDP d increased measured GDP by the value of the restaurant meals 9 The nominal interest rate is the a interest rate corrected for inflation b real cost of borrowing to the borrower c real rate of return to the lender d interest rate as usually reported by banks 10 In national income accounting, we use which of the following pairs of terms interchangeably? a investment and purchases of stocks and bonds b saving and national saving c public saving and government tax revenue minus government spending d investment and private saving 11 The CPI is a measure of the overall cost of the goods and services bought by a a typical firm b the government c a typical consumer 12 Suppose that Congress were to institute an investment tax credit What would happen in the market for loanable funds? a The demand for loanable funds would shift right b The supply of loanable funds would shift left c The demand for loanable funds would shift left d The supply of loanable funds would shift right Cengage Learning Testing, Powered by Cognero Page 2

3 13 A budget surplus a causes government debt to increase b occurs when the government has debt equal to zero c exists when government spending is greater than tax revenues d reduces the government s debt 14 A farmer produces oranges and sells them to Fresh Juice, which makes orange juice The oranges produced by the farmer are called a intermediate goods b inventory goods c transitory goods d final goods 15 For the purpose of calculating the consumer price index, the basket of goods a is kept the same from year to year; otherwise, the value of the index would remain constant from year to year b varies from year to year so that consumers buying patterns are updated in a timely fashion c varies from year to year; otherwise, the value of the index would remain constant from year to year d is kept the same from year to year so that the effects of price changes are isolated from the effect of any quantity changes that might be occurring at the same time 16 Banks a are financial intermediaries, but mutual funds are not financial intermediaries b are financial markets, as are bond markets c play a role in creating an asset that people can use as a medium of exchange 17 Fran buys 1,000 shares of stock issued by Miller Brewing In turn, Miller uses the funds to buy new machinery for one of its breweries a Fran and Miller are both investing b Fran is saving; Miller is investing c Fran and Miller are both saving d Fran is investing; Miller is saving 18 The real interest rate is the a difference between the interest rate charged by banks on the loans they make and the interest rate paid by banks to their depositors b interest rate as usually reported by banks c difference between the average dividend yield on stocks and the average interest rate on bonds d interest rate corrected for inflation 19 Which of the following are human capital and physical capital, respectively? a for a brick layer: her bricks and her tools b for a medical office: the building and the doctors knowledge of medicine c for a restaurant: the chefs knowledge about preparing food and the equipment in the kitchen d for a gas station: the pumps and the cash register Cengage Learning Testing, Powered by Cognero Page 3

4 20 Which of the following is included in government purchases? a unemployment benefits a state pays b Social Security payments the US government makes c the services of a US government attorney valued at the cost of her salary 21 Other things equal, relatively poor countries tend to grow a slower than relatively rich countries; this is called the fall-behind effect b slower than relatively rich countries; this is called the poverty trap c faster than relatively rich countries; this is called the catch-up effect d faster than relatively rich countries; this is called the constant-returns-to-scale effect 22 Which of the following is the correct formula for the GDP deflator? a b c d 23 Which of the following lists correctly identifies the four expenditure categories of GDP? a consumption, saving, investment, depreciation, b consumption, government purchases, investment, savings c consumption, government purchases, investment, net-exports d consumption, investment, depreciation, net-exports 24 Which of the following is included in the investment component of GDP? a spending to build new houses b spending on business equipment such as welding equipment c spending to build new factories d All of the above are included in the investment component of GDP 25 The nominal interest rate tells you a the purchasing power of your bank account today b how fast the purchasing power of your bank account rises over time c how fast the number of dollars in your bank account rises over time d the number of dollars in your bank account today Cengage Learning Testing, Powered by Cognero Page 4

5 26 US GDP a excludes production of foreigners working in the US and production by US residents working in foreign countries b includes production of foreigners working in the US and production by US residents working in foreign countries c includes production of foreigners working in the US but excludes production by US residents working in foreign countries d excludes production of foreigners working in the US but includes production by US residents working in foreign countries 27 Given that Monika's income exceeds her expenditures, Monika is best described as a a borrower or as a demander of funds b saver or as a supplier of funds c borrower or as a supplier of funds d saver or as a demander of funds 28 If the nominal interest rate is 7 percent and the rate of inflation is 3 percent, then the real interest rate is a 4 percent b 10 percent c 3 percent d 7 percent 29 Which of the following headlines is more closely related to what microeconomists study than to what macroeconomists study? a The price of gasoline rises due to rising oil prices b Real GDP falls by 04 percent in the third quarter c Inflation was 24 percent last year d Unemployment rate falls from 75 percent to 73 percent 30 Which of the following is included in government purchases? a the services of a US government attorney valued at the cost of her salary b Social Security payments the US government makes c unemployment benefits a state pays Answer key will be given in class and not ed to absent students without valid excuses stated in course syllabus Cengage Learning Testing, Powered by Cognero Page 5