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ECO561 ECO/561 FINAL EXAM NEW CLASSROOM 1

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Question;1) Suppose that in the clothing market, production;costs have fallen, but the equilibrium price and quantity purchased have both;increased. Based on this information you can conclude that;A. the supply of clothing has grown faster than the;demand for clothing;B. demand for clothing has grown faster than the;supply of clothing;C. the supply of and demand for clothing have grown;by the same proportion;D. there is no way to determine what has happened to;supply and demand with this information;2) Camille's Creations and Julia's Jewels both sell;beads in a competitive market. If at the market price of $5, both are running;out of beads to sell (they can't keep up with the quantity demanded at that;price), then we would expect both Camille's and Julia's to;A. raise their price and reduce their quantity;supplied;B. raise their price and increase their quantity;supplied;C. lower their price and reduce their quantity;supplied;D. lower their price and increase their quantity;supplied;3) In which of the following industries are;economies of scale exhausted at relatively low levels of output?;A. Aircraft production;B. Automobile manufacturing;C. Concrete mixing;D. Newspaper printing;4) The average cost curves (AVC and ATC) should be;minimized;A. where MC = ATC and MC = AVC;B. where FC = ATC and FC = AVC;C. where TC starts to increase at a faster rate;D. where ATC = AVC;5) If the wage rate increases;A. a purely competitive producer will hire less;labor, but an imperfectly competitive producer will not;B. an imperfectly competitive producer will hire;less labor, but a purely competitive producer will not;C. a purely competitive and an imperfectly;competitive producer will both hire less labor;D. an imperfectly competitive producer may find it;profitable to hire either more or less labor;6) The real wage will rise if the nominal wage;A. falls more rapidly than the general price level;B. increases at the same rate as labor productivity;C. increases more rapidly than the general price;level;D. falls at the same rate as the general price level;7) Construction workers frequently sponsor political;lobbying in support of greater public spending on highways and public;buildings. One reason they do this is to;A. restrict the supply of construction workers;B. increase the elasticity of demand for;construction workers;C. increase the demand for construction workers;D. increase the price of substitute inputs;8) Paying an above-equilibrium wage rate might reduce;unit labor costs by;A. permitting the firm to attract lower-quality;labor;B. increasing the cost to workers of being fired for;shirking;C. increasing voluntary worker turnover;D. increasing the supply of labor;9) A good real-world example of monopolistic;competition is;A. lawyers;B. gas stations;C. Time Warner Cable;D. groceries stores;10) An industry comprising a small number of firms;each of which considers the potential reactions of its rivals in making;price-output decisions, is called;A. monopolistic competition;B. oligopoly;C. pure monopoly;D. pure competition;11) Price is constant or given to the individual;firm selling in a purely competitive market because;A. the firm's demand curve is downward sloping;B. of product differentiation reinforced by;extensive advertising;C. each seller supplies a negligible fraction of;total supply;D. there are no good substitutes for its product;12) The most important pricing strategy for a;perfectly competitive firm is;A. minimizing cost;B. maximizing sales;C. product differentiation;D. advertising;13) Which of the following is a nonprice barrier of;entry?;A. Huge sunk cost;B. Discounts;C. Product differentiation;D. Advertising;14) A third-degree price discrimination can be;applied to which of the following market structures?;A. A monopoly;B. An oligopoly;C. A monopolistic competition;D. A perfect competition;15) Investing in R&D is more likely to occur in;markets where;A. firms have monopoly power protected by regulatory;barriers;B. markets are closely competitive markets with;close to zero economic profits;C. markets are oligopoly markets with strong;collusion agreements;D. markets are monopolistic competitive markets;16) All economies of scale are achieved at the;minimum of;A. average total cost;B. total cost;C. average variable cost;D. average fixed cost;17) Inflation is undesirable because it;A. arbitrarily redistributes real income and wealth;B. invariably leads to hyperinflation;C. usually is accompanied by declining real GDP;D. reduces everyone?s standard of living in the same;proportion;18) An economy?s aggregate demand curve shifts;leftward or rightward by more than changes in initial spending because of the;A. net export effect;B. wealth effect;C. real-balances effect;D. multiplier effect;19) Suppose productivity rises in a particular;economy, but wages stay the same. Other things equal;A. the demand curve will shift leftward;B. the supply curve will shift rightward;C. the supply curve will shift leftward;D. expenditures curve will shift rightward;20) If personal taxes were decreased and resource;productivity increased simultaneously, the equilibrium;A. output would rise;B. output would fall;C. price level would necessarily fall;D. price level would necessarily rise;21) Expansionary fiscal policy is so named because;it;A. involves an expansion of the nation's money;supply;B. can only be attained by expanding government;consumption;C. is aimed at achieving greater price stability;D. can motivate an expansion of real GDP;22) Suppose the price level is fixed, the MPC is.5;and the GDP gap is a negative $100 billion. To achieve full-employment output;(exactly), government should;A. increase government expenditures by $100 billion;B. increase government expenditures by $50 billion;C. reduce taxes by $50 billion;D. reduce taxes by $200 billion;23) GDP understates the value of output produced by;an economy because it;A. includes transactions that do not take place in;organized markets, such as home cooked meals;B. includes environmental degradation caused by increased;output production;C. excludes value added from the underground;economy, such as tips taken under the table;D. excludes the value of the wages and benefits of;government employee;24) Other things equal, a decrease in the real;interest rate will;A. shift the investment demand curve to the right;B. shift the investment demand curve to the left;C. move the economy upward along its existing;investment demand curve;D. move the economy downward along its existing;investment demand curve;25) Other things equal, a decrease in corporate;income taxes will;A. decrease the market price of real capital goods;B. have no effect on the location of the investment;demand curve;C. shift the investment demand curve to the right;D. shift the investment demand curve to the left;26) Inflation in U.S. prices will cause;A. an increase in the demand for U.S. dollars and an;appreciation in the exchange rate;B. an increase in the supply of U.S. dollars and a;depreciation in the exchange rate;C. a decrease in the demand for U.S. dollars and a;depreciation in the exchange rate;D. a decrease in the supply of U.S. dollars and an;appreciation in the exchange rate;27) The quantity theory of money states that;A. the money supply divided by the velocity of money;equals the price level divided by real output;B. the money supply times the velocity of money;equals the price level times real output;C. the money supply times the price level equals;real output divided by the velocity of money;D. the money supply times the price level equals real;output times the velocity of money;28) Suppose that U.S. prices rise 4% over the next;year while prices in Mexico rise 6%. According to the purchasing power parity;theory of exchange rates, what should happen to the exchange rate between the;dollar and the peso?;A. The dollar should depreciate.;B. The peso should appreciate.;C. The peso should depreciate.;D. The dollar will be revalued.;29) A rise in the domestic interest rate leads to;capital;A. outflows and exchange rate appreciation;B. outflows and exchange rate depreciation;C. inflows and exchange rate depreciation;D. inflows and exchange rate appreciation;30) A firm under monopolistic competition will earn;A. a positive economic profit as it has some;monopoly power;B. zero economic profit as it sets P = MC;C. zero economic profit as its P = ATC;D. a positive economic profit as it sets MC = MR;rogue.phoenix.39@facebook.com

 

Paper#55322 | Written in 18-Jul-2015

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