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Devry Eco312 final exam (decemeber 2014)

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Question;Devry Eco312 final exam (decemeber 2014)Page 1;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) Which is consistent with the law of;demand? (Points: 4);A decrease in;the price of tacos causes no change in the quantity of tacos demanded.;An increase in;the price of pizza causes an increase in the quantity of pizza demanded.;An increase in;the price of hamburgers causes a decrease in the quantity of hamburgers;demanded.;A decrease in;the price of turkey sandwiches causes a decrease in the quantity of turkey;sandwiches demanded.;Question 6.6. (TCO 2) What combination of changes would most;likely decrease the equilibrium price? (Points: 4);When supply;decreases and demand increases;When demand;increases and supply increases;When demand;decreases and supply decreases;When supply;increases and demand decreases;Question 7.7. (TCO 2) When the price of movie tickets in a;certain town was reduced, the movie theaters' revenues did not change. This suggests that the demand for movie;tickets in that town has a price-elasticity coefficient of (Points: 4);1.0.;greater than 1.;0.5.;zero.;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 purely competitive firm's output is;such that its marginal cost is $4 and marginal revenue is $5. Hint: remember;that MR = P for Pure Competition and the Profit Maximizing rule. Assuming;profit maximization, the firm should (Points: 4);cut its price;and raise its output.;raise its price;and cut output.;leave price;unchanged and raise output.;leave price;unchanged and cut output.;Question 10.10. (TCO 2) Which would definitely not be an;example of price discrimination? (Points: 4);A theater;charges children less than adults for a movie.;Universities charge higher tuition for;out-of-state residents.;A doctor;charges for services according to the income of patients.;An electric;power company charges less for electricity used during off-peak hours when;production costs are lower.;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) In the short run (Points: 4);a firm cannot;vary its output level.;all factors of;production can be varied.;a firm can;change its fixed inputs.;output is;raised or reduced by changing the levels of variable inputs.;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) In calculating the unemployment;rate, part-time workers are (Points: 4);counted as;unemployed because they are not working full-time.;counted as;employed because they are receiving payment for work.;used to;determine the size of the labor force, but not the unemployment rate.;treated the;same as "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) GDP tends to overstate economic;well-being because it takes into account (Points: 4);improvements in;product quality over time.;expenditures;undertaken to correct pollution.;illegal;activities of individuals and businesses.;nonmarket;activities, such as the productive work of homemakers.;Question 17.17. (TCO 6) Fiscal policy is enacted through;changes in (Points: 4);interest rates;and the price level.;the supply of;money and foreign exchange.;unemployment;and inflation.;taxation and;government spending.;Question 18.18. (TCO 6) Refer to the graph. What combination would most likely cause a;shift from AD1 to AD3?;Graph;Description (Points: 4);Increases in;taxes and government spending;Decrease in;taxes and increase in government spending;Increase in;taxes and decrease in government spending;Decreases in;taxes and government spending;Question 19.19. (TCO 6) Which of the following serves as an;automatic stabilizer in the economy? (Points: 4);Interest rates;Exchange rates;Inflation rate;Progressive;income tax;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) If the price of crude oil decreases;then this event would most likely (Points: 4);decrease;aggregate supply in the U.S.;increase;aggregate supply in the U.S.;increase;aggregate demand in the U.S.;decrease;aggregate demand in the U.S.;Question 4.4. (TCO 5) With cost-push inflation in the short;run, there will be (Points: 4);an increase in;real GDP.;a leftward;shift in the aggregate demand curve.;a decrease in;real GDP.;a decrease in;unemployment.;Question 5.5. (TCO 6) Dissaving occurs when (Points: 4);income is;greater than saving.;income is less;than consumption.;saving is;greater than consumption.;saving is;greater than the interest rate.;Question 6.6. (TCO 7) The M1 money supply is composed of;(Points: 4);all coins and;paper money held by the general public and the banks.;bank deposits;of households and business firms.;bank deposits;and mutual funds.;checkable;deposits and currency in circulation.;Question 7.7. (TCO 7) United States currency has value;primarily because it (Points: 4);is legal;tender, is generally acceptable in exchange for goods or services, and is;backed by the gold and silver of the federal government.;is generally;acceptable in exchange for goods or services, is backed by the gold and silver;of the federal government, and facilitates trade.;is relatively;scarce, is legal tender, and is generally acceptable in exchange for goods and;services.;facilitates;trade, is legal tender, and permits the use of credit cards and near-monies.;Question 8.8. (TCO 7) The Federal Reserve System consists of;which of the following? (Points: 4);Federal Open Market;Committee and Office of Thrift Supervision;Federal Deposit;Insurance Corporation and Controller of the Currency;U.S. Treasury;Department and Bureau of Engraving and Printing;Board of;Governors and the 12 Federal Reserve Banks;Question 9.9. (TCO 7) Which of the following is the most;important function of the Federal Reserve System? (Points: 4);Setting reserve;requirements;Controlling the;money supply;Lending money;to banks and thrifts;Acting as fiscal;agent for the U.S. government;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) The establishment of a federal;deposit insurance program resulted from the (Points: 4);establishment;of the Federal Reserve System in 1913.;speculation;during World War I.;stock market;crash of 1987.;bank panics of;1930-1933.;Question 12.12. (TCO 7) The purchase and sale of government;securities by the Fed is called (Points: 4);federal funds;market.;open market;operations.;money market transactions.;term auction;facility.;Question 13.13. (TCO 7) The tools of monetary policy for;altering the reserves of commercial banks are the (Points: 4);tax rate;transfer payments, and level of government spending.;consumer price;index, inflation, and unemployment rate.;public debt;budget surplus, budget deficit, and interest rates.;discount rate;reserve ratio, open market operations, and term auction facility.;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) Tariffs and quotas are costly to;consumers because (Points: 4);the price of;the imported good falls.;the supply of the imported good increases.;import;competition increases for domestic goods.;consumers shift;purchases to higher-priced domestic goods.;Question 18.18. (TCO 8) Tariffs and import quotas would;benefit the following groups, except (Points: 4);consumers of;the product.;domestic;producers of the product.;workers in;domestic firms producing the product.;the government;of the importing country.;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) French and German farmers wanting to;buy equipment from an American manufacturer based in the U.S. will be (Points;4);supplying;dollars and also supplying euros in the foreign exchange market.;demanding;dollars and also demanding euros in the foreign exchange market.;supplying;dollars and demanding euros in the foreign exchange market.;supplying euros;and demanding dollars in the foreign exchange market.;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) If the exchange rate is $1 = 0.7841;euro, then a French DVD priced at 20 euros would cost an American buyer;(excluding taxes and other fees) (Points: 4);$15.68.;$20.78.;$25.51.;$27.84.;Question 5.5. (TCO 9) Which system would be accompanied by occasional;currency interventions by central banks to stabilize or alter rates to avoid;persistent balance of payments deficits or surpluses? (Points: 4);Gold standard;Fixed exchange;rates;Flexible;exchange rates;Managed floating;exchange rates;Question 6. 6.;(TCO 8) a) Explain;four problems with the argument that trade protection is needed to protect;American jobs. b) Describe the economic;reasons why businesses use offshoring.;(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)

 

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