Econ 102 Section 4 - Principles of Macroeconomics
Instructor: C. Burkart
You will receive 8 points for putting your exam version in the “SPECIAL CODES” column “K.” Your exam version is at the top right hand side of this page. If you do not enter your exam version there, your exam grading will also be significantly delayed. There are 24 questions, each worth three points.
1. In which of the following situations would the average standard of living rise?
a. GDP grows at the same rate as population.
b. GDP grows more slowly than population.
c. GDP grows faster than population.
d. GDP per capita remains constant.
2. Over the past 30 years in the U.S., increases in labor demand have been _______ than increases in labor supply so that wages on average have ___________
a. Smaller; increased
b. Larger; increased
c. Smaller; decreased
d. Larger; decreased
3. Which of the following might increase labor supply?
a. Increasing transfer payments to the needy
b. Decreasing income tax rates
c. Increasing income tax rates
d. Increasing the availability of government-sponsored training programs
4.
Suppose that the level of real GDP is $1,000,000 and the
economy has 10,000 workers. Labor Productivity
a. Is $100 per worker
b. Is $0.01 per worker
c. Is $1,000,000 per worker
d. Cannot be computed with the information given (I will give credit for this answer, as the question was incorrectly/poorly worded).
5. Labor productivity is:
a. the total hours of work per worker.
b. total output per hour worked.
c. stock of capital divided by employment.
d. employed workers divided by unemployed workers.
6. The average standard of living is also known as:
a. GDP.
b. Real GDP.
c. The income distribution.
d. Per capita real GDP.
7. Along the production function, which of the following are held constant?
a. Wages, output, and labor.
b. Output, technology, and labor.
c. Technology, land, and labor.
d. Land, capital, and technology.
8. The government runs a budget deficit when:
a. government purchases exceed net tax revenues.
b. net tax receipts are negative.
c. transfer payments exceed government purchases.
d. the money supply increases.
9. In the circular flow of a simple economy with only households and businesses:
a. households sell output in order to save.
b. businesses sell output in order to consume goods.
c. households buy goods with income they earn from their resources.
d. businesses sell resources so that they can earn income.
10. The classical model does a good job of explaining the ___________ while doing a poor job of explaining the ____________.
a. Short run; long run
b. Business cycle; long run
c. Short run; business cycle
d. Long run; short run
11. Assume that markets clear. If in the labor market there is
a. An excess supply of labor, wages will rise
b. An excess demand for labor, wages will fall
c. An excess demand for labor, wages will rise
d. A shortage of labor, wages will fall.
12. How do people (households) in a market economy obtain income that is used to buy goods and services?
a. Supplying labor and other resources to firms
b. Trading goods and services in a barter system
c. Selling goods and services to each other
d. None of the above
13. Suppose the current equilibrium wage is $15 an hour. Which of the following is true?
a. A real wage above $15/hr. would lead to an excess demand for labor
b. A real wage above $15/hr. would lead to an excess supply of labor
c. The real wage must fall to prevent unemployment
d. The real wage must rise to prevent unemployment
14. What condition must be met in order for total spending to equal total output?
a. The sum of saving and government purchases must equal the sum of planned investment and net taxes
b. The sum of saving and net taxes must equal the sum of planned investment and government purchases
c. The sum of saving an planned investment must equal the sum of government purchases and net taxes
d. Saving must equal net taxes
15. Which of the following lists represent leakages?
a. Government purchases, net taxes, and household saving.
b. Household saving and planned investment
c. Planned investment and net taxes
d. Household saving and net taxes
16. Assume the economy is currently in equilibrium. Use the following information to calculate the total value of injections.
|
Consumption spending |
$ 5.0 |
trillion |
|
Net taxes |
$ 2.9 |
trillion |
|
Household saving |
$ 2.8 |
trillion |
|
Investment spending |
$ 2.3 |
trillion |
|
Government purchases |
$ 3.4 |
trillion |
Total injections are:
a. $10.7 trillion
b. $5.1 trillion
c. $5.9 trillion
d. $5.7 trillion
17. Assume a closed economy (the basic form we discussed in class). If consumption spending is $6.2 trillion, investment spending is $2.5 trillion, net taxes are $1.5 trillion and total income is $11 trillion, how much must government purchases be?
a. $2.3 trillion (SOLUTION BELOW)
b. $0.8 trillion
c. $3.3 trillion
d. cannot be determined without more information
18. In the classical model, the demand for loanable funds comes from
a. Consumption expenditures and the government deficit
b. Net taxes and government expenditures
c. Government purchases
d. Investment spending and the government deficit
19. In the loanable funds market, if the government is running a deficit
a. It is a supplier of funds as it’s taking in more than it’s spending
b. It is a demander of funds as it’s taking in more than it’s spending
c. It is a supplier of funds as it’s spending more than it’s taking in
d. It is a demander of funds as it’s spending more than it’s taking in
20. Fiscal policy is
a. A change in the money supply designed to change total spending
b. A change in interest rates designed to change total spending
c. A change in government purchases or net taxes designed to change total spending
d. A change in government regulations designed to change total spending
21. In the classical model, fiscal policy is both ineffective and unnecessary
a. True
b. False
22. Suppose that an economy has a total real output of $1 trillion per month, and that in total its workers worked 14 billion hours. What is the approximate productivity of the economy?
a. $14/hour
b. $71/hour
c. $7/hour
d. $140/hour
23. If the workers in an economy work 14 billion hours in a month, and there are 100 million workers, what are the average hours worked?
a. 14 hours/month
b. 71 hours/month
c. 7 hours/month
d. 140 hours/month
24. If, out of a population of 250 million, the labor force is comprised of 100 million workers, what is the LFPR?
a. 0.4
b. 1.5
c. 5
d. None of the above