ECON 1000 (Spring 2018 Section 19) Exam #2B Multiple Choice Questions: (3 points each) 1. I am taking of the exam. B. Version B 2. The Brain Drain refers to the A. tendency for the most highly talented people from developing countries to become educated and then move to an already wealthy country. B. conjecture that poor countries will remain poor since they do not have sufficient resources available to make the investments in capital which are necessary for economic growth C. observation that lifelong politician are never able to drain the swamp, something that can only ever be done if an outsider is elected to office. D. tendency for wealthy people in poor countries to invest their financial resources abroad instead of at home. 3. The function of government refers to government policies aimed at changing the final apportionment of goods/services across consumers, usually with the intention of realizing a fairer allotment of consumption/income/wealth. A. Distribution B. Stabilization C. Allocation D. Inefficiency 4. The efficient level of trade is defined as the level of trade which A. maximizes Total Social Surplus. B. maximizes Total Consumers Surplus. C. minimizes the difference between Total Consumers Surplus and Total Producers Surplus. D. maximizes Deadweight Loss. 5. The Catch-up effect suggests that, all other factors fixed, A. the global economy is rigged against new entrants, in that there is no way for poor countries to catch-up with rich countries. B. illegal immigrants keep wages of hard working Americans down, preventing low and middle income citizens from catching-up to the wealthy. C. whenever a countries experiences rapid growth in GDP, they must also experience a decrease in income inequality. D. growth rates of less developed countries typically exceed growth rates of developed countries, implying that the gap in GDP between less developed and developed countries will decrease over time. 6. Focusing on the Unemployment Rate in the United States (reported on a monthly basis) between January 1948 and December 2015, the highest realized level was a rate of A. 4.1% in January 2018. B. 6.9% in June 1967. C. 10.8% in November and December 1982. D. 21.4% in December 2008.
7. Good Y is non-rival in consumption and non-excludable. As a result, if Good Y were simply sold in the marketplace, we should expect A. less than the efficient amount of Good Y to be traded. B. more than the efficient amount of Good Y to be traded. C. exactly the efficient amount of Good Y to be traded. D. None of the above answers are necessarily correct (since we need to know something about costs of production in order to be able to determine whether the resulting level of trade will be more than, less than, or exactly equal to the efficient level of trade). 8. Which of the following statements is accurate? Between 1915 and 2015 the value of A. Real GDP in the U.S. slightly decreased, from $46,231 to $44,837 (in 2009 dollars). B. Real GDP Per Capita in the U.S. became roughly 8.3 times larger, increasing from $6,113 to $50,820 (in 2009 dollars). C. Nominal GDP in the U.S. became roughly 460.2 times larger, increasing from $39.0 billion to $17,947.0 billion. D. More than one (perhaps all) of the above answers are correct. 9. 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. Deadweight Loss B. The Open-Ended Fallacy C. Crony Capitalism D. Market Power 10. Per Capita GDP in the European Union is approximately $37,800. In comparison, the value of Per Capita GDP in the U.S. is approximately A. $76,375 (just more than double the value in the E.U.). B. $56,300 (about 48.9% higher than the value in the E.U.). C. $38,015 (just above the value in the E.U.). D. $18,980 (about half the value in the E.U.). For questions 11 and 12, consider a country with realized rates of inflation, unemployment, and GDP growth between 2013 and 2016 as summarized in the table below. 2013 2014 2015 2016 Inflation Rate 2.4% 1.6% 0.6% 0.7% Unemployment Rate 5.1% 6.4% 6.5% 7.2% Real GDP Growth Rate 2.5% 1.2% 1.6% 2.0% 11. In which year was the Misery Index greatest in value? A. 2013. B. 2014. C. 2015. D. 2016. 12. In which year did this country realize deflation? A. Both 2015 and 2016. B. 2014. C. 2015. D. 2016.
13. Consider a situation in which Andy loses $20, Becky gains $5, and Carl gains $10. Based upon this information alone, it appears as if this is a outcome in a environment. A. lose-lose; negative-sum. B. win-win; positive-sum. C. win-lose; positive-sum. D. win-lose; negative-sum. 14. Per Capita GDP of Laos was $5,400 in 2017. If Laos experiences a constant 4% increase in Per Capita GDP per year indefinitely into the future, then its Per Capita GDP would be approximately $21,600 (i.e., four times larger) in. A. 2092 (i.e., 75 years from now) B. 2071 (i.e., 54 years from now) C. 2067 (i.e., 50 years from now) D. 2053 (i.e., 36 years from now) 15. provides a measure of the total value of all final goods/services produced within an economy in a given period of time, with all goods/services valued according to current period prices, whereas provides a measure of the total value of all final goods/services produced within an economy in a given period of time, with all goods/services valued according to a single set of common, constant prices. A. Real GDP; Nominal GDP. B. Nominal GDP; Real GDP. C. Real GDP; Imaginary GDP. D. Imaginary GDP; Real GDP. 16. High income countries with primarily market based economies, large stocks of technologically advanced industrial capital, and a highly educated and skilled workforce (e.g., U.S., Norway, Australia, Germany, Japan) are referred to as A. Alpha Countries. B. Less Developed Countries. C. Industrially Advanced Countries. D. Economically Superior Countries. For questions 17 and 18, 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 3,550,000 230,000 220,000 800,000 17. There are people in the labor force of this society. A. 4,800,000 B. 4,570,000 C. 4,000,000 D. 3,780,000 18. This society s Unemployment Rate is. A. approximately 4.58% B. 5.5% C. approximately 10.45% D. 21.25%
19. Madison bought a barbeque chicken sandwich from Williamson Brothers BBQ. This sandwich is excludable and rival in consumption. It is therefore described as a good. A. Common B. Club C. Private D. Public 20. Market Power refers to A. attempts by government to minimize fluctuations in overall macroeconomic activity. B. a situation in which the free market outcome is inefficient, in that there is a positive Deadweight-Loss at the resulting free market level of trade. C. the ability of a firm to have some control over the price of their output (in that, (i) they can increase price without losing all customers and (ii) they must decrease price in order to increase sales). D. the amount by which revenue changes as the firm s quantity of output is increased by one unit 21. Focusing on GDP Growth Rates in recent decades, grew at an average rate of 10.30% per year between 2000 and 2009 and continued to grow at an average rate of 8.56% per year between 2010 and 2014. A. Brazil B. The European Union C. Japan D. China 22. In 2015 there were deaths from malaria world-wide, with of these occurring in Africa. A. 12.2 million; 58%. B. 438,000; 90%. C. 983; 412. D. None of the above answers are correct (since malaria was eradicated in 2009). For questions 23 and 24, consider a country with consumption expenditures, private investment expenditures, government purchases, exports, and imports (each measured in billions of Euros), plus current population, as summarized in the table below: Consumption Investment Government Exports Imports Population Expenditures Expenditures Purchases 982 198 410 187 172 56,000,000 23. For this country Net Exports are equal to. A. 15 (i.e., negative 15 billion Euros) B. 15 billion C. 359 billion D. 1,949 billion (i.e., 1.949 trillion Euros) 24. For this country, Gross Domestic Product Per Capita approximately is equal to. A. 34,803.57 B. 28,660.71 C. 28,392.86 D. 17,535.71
25. Government Spending as a Percentage of GDP in the United States stands at 39.53% in 2018. This figure is estimated to A. decrease to 34.2% in 2019 and to 29.6% in 2020. B. remain roughly constant over the next two years, at 40.00% in 2019 and 40.26% in 2020. C. increase to 44.1% in 2019 and to 49.3% in 2020. D. increase to 48.0% in 2019 but then decrease to 35.4% in 2020. 26. As discussed in lecture, society can achieve economic growth by A. implementing policies which would provide incentives for people to retire at an earlier age. B. making deliberate investments in human capital and physical capital. C. replacing market based economic institutions with mechanisms of command planning. D. More than one (perhaps all) of the above answers is correct. For Questions 27 through 29, consider a monopolist facing Demand and with Marginal Costs and Marginal Revenue as illustrated below. $ 34.20 24.00 A B Marginal Costs of Production 16.80 C F D G E H J Demand 12.00 I 0 quantity 0 Marginal 2,720 Revenue 4,640 5,920 9,120 27. To maximize profit, this monopolist would A. sell 5,920 units of output, each at a price of $12.00. B. sell 4,640 units of output, each at a price of $16.80. C. sell 2,720 units of output, each at a price of $24.00. D. sell 2,720 units of output, each at a price of $12.00. 28. The efficient level of output for this good is units. A. 0 B. 2,720 C. 4,640 D. 9,120 29. When this monopolist chooses the price and quantity which maximizes profit, Deadweight-Loss is A. equal to area (J). B. equal to areas (E)+(H). C. equal to areas (F)+(G)+(H)+(I). D. equal to areas (A)+(B)+(C)+(D)+(E).
30. In 2008 Zimbabwe experienced an annual inflation rate of 12,563%. This is an example of A. hyperinflation. B. deflation. C. Market Power. D. the Brain Drain. 31. As depicted in the Expanded Circular Flow Diagram, government collects taxes from A. both domestic households and domestic firms (but not from any foreign sources). B. both domestic firms and foreign firms (but not from any households). C. both foreign households and foreign firms (but not from any domestic sources). D. only domestic households (but not domestic firms or any foreign sources). 32. Consider a market in which the maximum possible value of Total Social Surplus is $1,400,000. If the realized level of Total Social Surplus is $1,200,000, then Deadweight Loss in this market is equal to. A. $2,600,000 B. $1,300,000 C. $200,000 D. $ 200,000 (i.e., negative $200,000) 33. The Great Misery refers to the period of time A. when Donald Trump was initially President, when the value of the Dow Jones Industrial Average decreased in value by 39.1% in less than three months. B. Ronald Reagan was initially President, when the GDP growth rate was negative for 18 consecutive quarters (i.e., four and a half straight years). C. from November 1973 through June 1983 when the sum of the unemployment rate and inflation rate was 12.50 or higher for 116 consecutive months. D. the early 1990s when the U.S. experienced a negative inflation rate for 27 straight months between March 1990 and May 1992.
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