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Devry Eco312 final exam (decemeber 2014)




Question;Question 1. 1. (TCO 1) When a state government chooses to;build more roads, the required resources are no longer available for spending;on public education. This dilemma;illustrates the concept of (Points: 4);production;expenses.;unemployment;issues.;unintended;consequences.;opportunity cost.;Question 2. 2. (TCO1) Which is not a factor of production?;(Points: 4);Money;Land;Labor;Capital;Question 3. 3. (TCO1) A point on the production possibilities;curve is (Points: 4);attainable and resources are;fully employed.;attainable, but;resources are unemployed.;unattainable;but resources are unemployed.;unattainable;and resources are fully employed.;Question 4. 4. (TCO1) A basic characteristic of a command;system is that (Points: 4);wages paid to;labor are higher.;government owns most economic;resources.;free markets;are never permitted in a command economy.;government;planners play a limited role in deciding what goods will be produced.;Question 5. 5. (TCO 2) The demand curve is a representation;of the relationship between the quantity of a product demanded and (Points: 4);supply.;wealth.;price.;income.;Question 6. 6. (TCO 2) A decrease in supply and a decrease;in demand will (Points: 4);increase price and affect the;equilibrium quantity in an indeterminate way.;decrease the;equilibrium quantity and decrease price.;increase the;equilibrium quantity and affect price in an indeterminate way.;decrease the;equilibrium quantity and affect price in an indeterminate way.;Question 7. 7. (TCO 2) You are the sales manager for a;software company and have been informed that the price elasticity of demand for;your most popular software is less than one.;To increase total revenues, you should (Points: 4);increase the price of the;software.;decrease the;price of the software.;hold the price;of the software constant.;increase the supply of the software.;Question 8. 8. (TCO 2) The price elasticity of demand;increases with the length of the period considered because (Points: 4);consumers;incomes will increase over time.;the demand;curve will shift outward as time passes.;all prices will;increase over time.;consumers will be better able to;find substitutes.;Question 9. 9. (TCO 2) A profit-maximizing firm in the short;run will expand output (Points: 4);until marginal;cost begins to rise.;until total;revenue equals total cost.;until marginal;cost equals average variable cost.;as long as;marginal revenue is greater than marginal cost.;Question 10. 10. (TCO 2) Which case below best represents a;case of price discrimination? (Points: 4);An insurance;company offers discounts to safe drivers.;A major airline sells tickets to;senior citizens at lower prices than to other passengers.;A professional;baseball team pays two players with identical batting averages different;salaries.;A utility;company charges less for electricity used during "off-peak" hours;when it does not have to operate its less-efficient generating plants.;Question 11. 11. (TCO 3) In the kinked demand model of;oligopoly, if one firm increases its price, the most likely reaction of the;other firms will be to (Points: 4);decrease their;prices.;increase their;prices.;not change their prices.;reduce their;quantity.;Question 12. 12. (TCO 3) The main difference between the;short run and the long run is that (Points: 4);firms earn zero;profits in the long run.;the long run;always refers to a time period of one year or longer.;in the short run, some inputs;are fixed.;in the long;run, all inputs are fixed.;Question 13. 13.;(TCO 4) Refer to the diagram. The phases of the business cycle from points;A to D are, respectively;Graph Description;(Points: 4);Peak;recession, expansion, trough;Trough;recovery, expansion, peak;Expansion;recession, trough, peak;Peak, recession, trough;expansion;Question 14. 14. (TCO 4) Official unemployment rate;statistics may (Points: 4);overstate the amount of unemployment by;including part-time workers in the calculations.;understate the;amount of unemployment by excluding part-time workers in the calculations.;overstate the;amount of unemployment because of the presence of "discouraged;workers who are not actively seeking employment.;understate the amount of;unemployment because of the presence of "discouraged" workers who are;not actively seeking employment.;Question 15. 15. (TCO 4) To avoid multiple counting in;national income accounts (Points: 4);only final goods and services;should be counted.;intermediate;goods and services should be counted.;both final and;intermediate goods and services should be counted.;primary;intermediate, and final goods and services should be counted.;Question 16. 16. (TCO 4) The service a homeowner performs;when she mows her yard is not included in GDP because (Points: 4);this is a nonmarket transaction.;this is a;nonproduction activity.;this is a;noninvestment transaction.;multiple;counting would be involved.;Question 17. 17. (TCO 6) The goal of expansionary fiscal;policy is to increase (Points: 4);the price;level.;aggregate;supply.;real GDP.;unemployment.;Question 18. 18. (TCO 6) Refer to the graph. What combination would most likely cause a;shift from AD1 to AD2?;Graph Description;(Points: 4);Increases in;taxes and government spending;Decrease in taxes and increase;in government spending;Increase in;taxes and no change in government spending;Decreases in;taxes and government spending;Question 19. 19. (TCO 6) The American Recovery and;Reinvestment Act of 2009 included mostly (Points: 4);increases in;taxes and government spending.;decreases in;taxes and government spending.;increases in government spending;and decreases in taxes.;decreases in;government spending and increases in taxes.;Question 20. 20. (TCO 6) If people expected that a tax cut;was temporary, then this fiscal policy's effect on the economy will tend to be;(Points: 4);stronger.;weaker.;the exact;opposite of what was intended.;as the multiplier;effect would predict.;Page 2;Question 1. 1. (TCO 5) A decrease in government spending;will cause a(n) (Points: 4);increase in the;quantity of real domestic output demanded.;decrease in the;quantity of real domestic output demanded.;decrease in aggregate demand.;increase in;aggregate demand.;Question 2. 2. (TCO 5) The long-run aggregate supply curve;is (Points: 4);upward-sloping;and becomes steeper at output levels above the full-employment output.;upward-sloping;and becomes flatter at output levels above the full-employment output.;horizontal.;vertical.;Question 3. 3. (TCO 5) Which would most likely increase;aggregate supply? (Points: 4);An increase in;the prices of imported products;An increase in productivity;A decrease in;business subsidies;A decrease in;personal taxes;Question 4. 4. (TCO 5) Deflation refers to a situation where;(Points: 4);price level;falls.;price level;rises.;the rate of inflation falls.;the rate of;inflation rises.;Question 5. 5. (TCO 6) If a family's MPC is.7, it means;that the family is (Points: 4);operating at;the break-even point.;spending seven-tenths of any;additional income.;necessarily;dissaving.;spending 70;percent of its disposable income.;Question 6. 6. (TCO 7) Which definition(s) of the money;supply include(s) only items which are directly and immediately usable as a;medium of exchange? (Points: 4);M1;M2;Neither M1 nor M2;M1 and M2;Question 7. 7. (TCO 7) Which of the following;backs" the value of money in the United States? (Points: 4);Gold stored in;the Federal Reserve Bank of New York;Acceptability of it as a medium;of exchange;Willingness of;foreign government to hold U.S. dollars;Size of the;budget surplus in the U.S. government;Question 8. 8. (TCO 7) The Federal Reserve System of the;U.S. is the country's (Points: 4);financial;adviser.;comptroller or;accountant.;central bank.;deposit;insurance provider.;Question 9. 9. (TCO 7) Which group is responsible for the;policy of changing the money supply? (Points: 4);Federal Open Market Committee;Office of;Management and Budget;Thrift Advisory;Council;Federal;Advisory Council;Question 10. 10. (TCO 7) Money is "created" when;(Points: 4);a depositor;gets cash from the bank's ATM.;a bank accepts deposits from its;customers.;people receive;loans from their banks.;people spend;the incomes that they receive.;Question 11. 11. (TCO 7) During the financial crisis of;2007-2008, the FDIC increased deposit insurance coverage from (Points: 4);$50,000 to;$100,000 per account.;$100,000 to $250,000 per account.;$200,000 to;$500,000 per account.;$500,000 to;$1,000,000 per account.;Question 12. 12. (TCO 7) Which one of the following is a;tool of monetary policy for altering the reserves of commercial banks? (Points;4);Issuing;currency;Check;collection;Open-market operations;Acting as the;fiscal agent for the federal government;Question 13. 13. (TCO 7) The most frequently used monetary;device for achieving price stability is: (Points: 4);open market operations.;the discount;rate.;the reserve;ratio.;the prime;interest rate.;Question 14. 14. (TCO 8) Which country is the United States;largest trading partner in terms of volume of trade? (Points: 4);Mexico;Japan;China;Canada;Question 15. 15. (TCO 8) Nation X has a comparative;advantage in the production of a product compared to Nation Y when (Points: 4);it imposes a;tariff on the importation of the product.;its production;possibilities curve expands, allowing it to produce more of the product.;it is achieving;full employment and is producing the maximum amount of the product.;it has the lower domestic;opportunity cost of producing the product.;Question 16. 16. (TCO 8) An excise tax on imported;commodities is known as a(n) (Points: 4);quota.;tariff.;export;restriction.;price ceiling.;Question 17. 17. (TCO 8) If a nation agrees to set an upper;limit on the total amount of a product that it exports to another nation, then;this situation would be an example of (Points: 4);an import;quota.;a revenue;tariff.;a protective;tariff.;a voluntary export restriction.;Question 18. 18. (TCO 8) The major beneficiaries of a tariff;on a product are the (Points: 4);domestic producers of the;product.;domestic;consumers of the product.;workers engaged;in trade, like transportation workers.;foreign;producers of the product.;Question 19. 19. (TCO 8) Which organization meets regularly;to establish rules and settle disputes related to international trade? (Points;4);The United;Nations Commission on Trade Law;The United;Nations Conference on Trade and Development;The World Trade Organization;The Federal;Reserve Board;Question 20. 20. (TCO 9) U.S. businesses are demanders of;foreign currencies because they need them to (Points: 4);produce goods;and services exported to foreign countries.;pay for goods and services;imported from foreign countries.;receive;interest payments from foreign governments.;receive;interest payments from foreign businesses.;Page 3;Question 1. 1. (TCO 9) In the balance of payments statement;a current account surplus will be matched by a (Points: 4);capital and financial accounts;deficit.;capital and;financial accounts surplus.;trade deficit.;trade surplus.;Question 2. 2. (TCO 9) If the United States wants to regain;ownership of domestic assets sold to foreigners, it will have to (Points: 4);increase;domestic consumption.;increase its;national debt.;export more than it imports.;import more;than it exports.;Question 3. 3. (TCO 9) Foreign exchange rates refer to the;(Points: 4);price at which;purchases and sales of foreign goods take place.;movement of;goods and services from one nation to another.;price of one nation's currency;in terms of another nation's currency.;difference;between exports and imports in a particular nation.;Question 4. 4. (TCO 9) When the exchange rate between pounds;and dollars moves from $2 = 1 pound to $1 = 1 pound, we say that the dollar has;(Points: 4);depreciated.;appreciated.;inflated.;deflated.;Question 5. 5. (TCO 9) The monetary system for conducting;international trade is usually described as a system of (Points: 4);fixed exchange;rates.;freely floating;exchange rates.;a managed gold;standard.;managed floating exchange rates.;Question 6. 6. (TCO 8) a) Define the four basic types of;trade barriers. b) Who gains and who;loses from a protective tariff? Explain.;(Points: 40)Question 7. 7.;(TCO 6) a) Identify the four major tools of monetary policy.;b) How can monetary policy address the problem of inflation?;(Points: 40)


Paper#55577 | Written in 18-Jul-2015

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