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devry ECO312 final exam

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Question;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.;2.(TCO1) Which of the following is;considered to be an entrepreneur? (Points;4);Self-employed personMBA graduate hired by a firm to be;its CEOProduction-line workerCustomer of a firm;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.;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.;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.;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.;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.;8.(TCO 2) The elasticity of supply;for a product will be 2 if: (Points;4);A 1 percent decrease in the price;causes a 0.2 percent decrease in quantity suppliedA 2 percent decrease in price causes a 1 percent decrease in quantity;suppliedA 1 percent decrease in price;causes a 2 percent decrease in quantity suppliedA 2 percent decrease in price;causes a 2 percent decrease in quantity supplied;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.;10.(TCO 2) Consumers who clip and;redeem discount coupons (Points;4);exhibit the same price elasticity;of demand for a given product than consumers who do not clip and redeem;coupons.exhibit more price elasticity of demand for a given product than;consumers who do not clip and redeem coupons.exhibit less price elasticity of;demand for a given product than consumers who do not clip and redeem coupons.cause total revenue to decrease;for firms that issue coupons for their products.;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.;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.;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, troughTrough, recovery, expansion, peakExpansion, recession, trough, peakPeak, recession, trough, expansion;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.;15.(TCO 4) GDP is the market value;of (Points: 4);resources (land, labor, capita;and entrepreneurship) in an economy in a given year.all final goods and services produced in an economy in a given year.consumption and investment;spending in an economy in a given year.all output produced and accumulated;over the years.;16.(TCO 4 G) Nominal GDP differs;from real DP because (Points;4);nominal GDP is based on constant;prices.real GDP is based on current;prices.real GDP is adjusted for changes in the price level.nominal GDP is adjusted for;changes in the price level.;17.(TCO 6) When the federal;government uses taxation and spending actions to stimulate the economy it;is conducting (Points;4);fiscal policy.incomes policy.monetary policy.employment policy.;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 spendingDecrease in taxes;and increase in government spendingIncrease in taxes and no change in government spending ? not 100% on this one as cannot;see graphDecreases in taxes;and government spending;19.(TCO 6) Which of the following;serves as an automatic stabilizer in the economy? (Points: 4);Interest ratesExchange ratesInflation rateProgressive income tax;20.(TCO 6) The time which elapses;between the beginning of a recession or an inflationary episode and the;identification of the macroeconomic problem is referred to as a(n) (Points: 4);budget lag.recognition lag.operational lag.administrative lag.;1.(TCO 5) An increase in;expected future income will (Points;4);increase aggregate demand and;aggregate supply.decrease aggregate demand and;aggregate supply.increase aggregate supply.increase aggregate demand.;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.;3.(TCO 5) Which would most;likely increase aggregate supply? (Points: 4);An increase in the prices of;imported productsAn increase in productivityA decrease in business subsidiesA decrease in personal taxes;4.(TCO 5) Disinflation refers to;a situation where (Points;4);price level falls, but the rate;of inflation does not.Price level rises, but the rate;of inflation does not.the rate of inflation falls, but the price level does not.the rate of inflation rises, but;the price level does not.;5.(TCO 6) With an MPS of.3, the;MPC will be (Points;4);1 -.3..3 - 1.1/.3..3.;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.;7.(TCO 7) The basic requirement;of money is that it be (Points;4);backed by precious metals--gold;or silver.authorized as legal tender by;the central government.generally accepted as a medium of exchange.some form of debt or credit.;8.(TCO 7) How many members can;serve on the Board of Governors of the Federal Reserve System? (Points: 4);SevenNine1214;9.(TCO 7) Which of the following;is the most important function of the Federal Reserve System? (Points: 4);Setting reserve requirementsControlling the money supplyLending money to banks and;thriftsActing as fiscal agent for the;U.S. government;10.(TCO 7) The Federal funds rate;is the rate that banks pay for loans from (Points: 4);the Fed.the U.S. Treasury.other banks.large corporations.;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.;12.(TCO 7) Which one of the following;is a tool of monetary policy for altering the reserves of commercial;banks? (Points: 4);Issuing currencyCheck collectionOpen-market operationsActing as the fiscal agent for;the federal government;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.;14.(TCO 8) Which of the following;products is a leading import of the United States? (Points: 4);GrainsAircraftPetroleumGenerating equipment;15.(TCO 8) In a two-nation;world, comparative advantage means that one nation can produce (Points: 4);a product with fewer inputs;than the other nation.a product at lower average;cost than the other nation.a product at a lower domestic opportunity cost than the other;nation.more of a product than the other;nation.;16.(TCO 8) If a nation imposes a;tariff on an imported product, then the nation will experience a(n) (Points: 4);decrease in total supply and an;increase in the price of the product.decrease in demand and a;decrease in the price of the product.decrease in supply of, and an;increase in demand for, the product.increase in supply of, and a decrease in demand for, the product.;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.;18.(TCO 8) When tariffs on;imported products are removed by a nation, it will result in (Points: 4);higher prices and lower;quantities consumed.higher prices and quantities consumed.lower prices and quantities;consumed.lower prices and higher;quantities consumed.;19.(TCO 8) A major goal of the;World Trade Organization is to (Points;4);increase the protection of;producers against foreign trade competition.encourage bilateral trade;agreements between nations.liberalize international trade among nations.maximize tariff revenue for;governments.;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;1.(TCO 5) An increase in;expected future income will (Points;4);increase aggregate demand and;aggregate supply.decrease aggregate demand and;aggregate supply.increase aggregate supply.increase aggregate demand.;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.;3.(TCO 5) Which would most;likely increase aggregate supply? (Points: 4);An increase in the prices of;imported productsAn increase in productivityA decrease in business subsidiesA decrease in personal taxes;4.(TCO 5) Disinflation refers to;a situation where (Points;4);price level falls, but the rate;of inflation does not.Price level rises, but the rate;of inflation does not.the rate of inflation falls, but the price level does not.the rate of inflation rises, but;the price level does not.;5.(TCO 6) With an MPS of.3, the;MPC will be (Points;4);1 -.3..3 - 1.1/.3..3.;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.;7.(TCO 7) The basic requirement;of money is that it be (Points;4);backed by precious metals--gold;or silver.authorized as legal tender by;the central government.generally accepted as a medium of exchange.some form of debt or credit.;8.(TCO 7) How many members can;serve on the Board of Governors of the Federal Reserve System? (Points: 4);SevenNine1214;9.(TCO 7) Which of the following;is the most important function of the Federal Reserve System? (Points: 4);Setting reserve requirementsControlling the money supplyLending money to banks and;thriftsActing as fiscal agent for the;U.S. government;10.(TCO 7) The Federal funds rate;is the rate that banks pay for loans from (Points: 4);the Fed.the U.S. Treasury.other banks.large corporations.;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.;12.(TCO 7) Which one of the following;is a tool of monetary policy for altering the reserves of commercial;banks? (Points: 4);Issuing currencyCheck collectionOpen-market operationsActing as the fiscal agent for;the federal government;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.;14.(TCO 8) Which of the following;products is a leading import of the United States? (Points: 4);GrainsAircraftPetroleumGenerating equipment;15.(TCO 8) In a two-nation;world, comparative advantage means that one nation can produce (Points: 4);a product with fewer inputs;than the other nation.a product at lower average;cost than the other nation.a product at a lower domestic opportunity cost than the other;nation.more of a product than the other;nation.;16.(TCO 8) If a nation imposes a;tariff on an imported product, then the nation will experience a(n) (Points: 4);decrease in total supply and an;increase in the price of the product.decrease in demand and a;decrease in the price of the product.decrease in supply of, and an;increase in demand for, the product.increase in supply of, and a decrease in demand for, the product.;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.;18.(TCO 8) When tariffs on;imported products are removed by a nation, it will result in (Points: 4);higher prices and lower;quantities consumed.higher prices and quantities consumed.lower prices and quantities;consumed.lower prices and higher;quantities consumed.;19.(TCO 8) A major goal of the;World Trade Organization is to (Points;4);increase the protection of;producers against foreign trade competition.encourage bilateral trade;agreements between nations.liberalize international trade among nations.maximize tariff revenue for;governments.;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.;1.(TCO 9) Remittances of Mexican;workers in the U.S. to their families in Mexico are included in the U.S.;balance of payments as a debit in the section on (Points: 4);trade in services.net international transfers.financial accounts.capital accounts.;2.(TCO 9) Comparing everything;that the United States owes to other nations, and what they owe to the;United States, the United States is currently a(n) (Points: 4);net creditor.net debtor.international banking asset.international banking liability.;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.;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.;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.;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)7.;(TCO;6) a) Identify the four major tools of monetary policy. b);Describe how changes in the Fed?s major policy tools leads to [1];expansionary and [2] restrictive or contractionay monetary policies..

 

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