Econtwo Finals (make-up)

74 Questions  I  By Aizelle_andrade
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Economics Quizzes & Trivia
Final Exam. Please be honest. Refrain from searching for or asking for the answers. You may use calculators and scratch papers. This is a timed exam. You are given 40 minutes to finish the exam. Once you submit your answers, you can no longer go back. You are only given 1 try. Good luck! :)

  
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  • 1. 
    Philippine Stock Exchange has two trading floors, Ortigas and Ayala trading floors, but it is the only exchange in the country
    • A. 

      True

    • B. 

      False


  • 2. 
    Trading from 12:00pm to 12:10pm is called the run-off and all trades are executed at closing price
    • A. 

      True

    • B. 

      False


  • 3. 
    You can purchase shares of stock either through IPO (Initial Public Offering) or through the open market. Shares sold through IPOs are offered for the first time to the public by the company (primary market) whereby proceeds of the sale go directly to the company. Shares of listed or publicly traded companies are bought during trading (open market). These shares have since been transferred from one owner to another (secondary market) and proceeds of the sales do not go directly to the company but to the owners of the shares
    • A. 

      True

    • B. 

      False


  • 4. 
    Ask price is the lowest price a seller of a security is willing to take for a unit of a security at a particular time. Also called "offer price".
    • A. 

      True

    • B. 

      False


  • 5. 
    Maktrade system is an auction trading system based on price and time priority.
    • A. 

      True

    • B. 

      False


  • 6. 
    In China, in order to cool inflation that surged to a 25-month high in October, the state-owned banking industry was ordered to set aside an additional 0.5 percent of deposits as reserves, effective Nov. 29. Reserves vary by institution but could be as high as 19 percent for the biggest commercial lenders
    • A. 

      True

    • B. 

      False


  • 7. 
    China is taking steps to cool its economy and fight inflation at the same time the Federal Reserve is trying to boost economic growth and ward off the threat of deflation, a destabilizing drop in prices and wages. The Fed launched a $600 billion bond-purchase program earlier this month, hoping to lower interest rates and spur more borrowing and spending
    • A. 

      True

    • B. 

      False


  • 8. 
    Ireland’s competitive advantages over other European countries are highly-skilled labor force and a 12.5% corporate tax rate
    • A. 

      True

    • B. 

      False


  • 9. 
    In the Philippines, the rate for the bellwether 91-day T-bill only reached 0.775 percent from the previous rate of 1.48 percent. This was the first time the interest rate for a government debt security fell below one percent
    • A. 

      True

    • B. 

      False


  • 10. 
    The market in which the equilibrium level of aggregate output is determined is the
    • A. 

      Labor market

    • B. 

      Bond market

    • C. 

      Money market

    • D. 

      Goods market


  • 11. 
    The two links between the goods market and the money market are
    • A. 

      Income and inflation rate

    • B. 

      Interest rate and unemployment rate

    • C. 

      Income and interest rate

    • D. 

      Inflation rate the unemployment rate


  • 12. 
    Which of the following is determined in the money market?
    • A. 

      Equilibrium interest rate

    • B. 

      Income

    • C. 

      Employment

    • D. 

      The government budger


  • 13. 
    If planned investment is perfectly unresponsive to changes in the interest rate, the planned investment schedule
    • A. 

      Has a negative slope

    • B. 

      Is horizontal

    • C. 

      Is vertical

    • D. 

      Has a postive slope


  • 14. 
    Which of the following equations represents equilibrium in the goods market?
    • A. 

      Y=Ms

    • B. 

      Md=C+I+G

    • C. 

      Md=Ms

    • D. 

      Y= C+I+G


  • 15. 
    When income increases, the money demand curve shifts to the ________, which ________ the interest rate with a fixed money supply
    • A. 

      Right; increases

    • B. 

      Right; decreases

    • C. 

      Left; increases

    • D. 

      Left; decreases


  • 16. 
    Fiscal policy affects the goods market through
    • A. 

      Changes in money supply

    • B. 

      Changes in taxes and money supply

    • C. 

      Changes in government spending and money supply

    • D. 

      Changes in taxes and government spending


  • 17. 
    Fiscal policy affects the money market through its effect on
    • A. 

      Income and money supply

    • B. 

      Income and money demand

    • C. 

      Money supply and money demand

    • D. 

      Money supply and income


  • 18. 
    Which of the following is an example of an expansionary fiscal policy?
    • A. 

      The BSP selling government securities in the open market

    • B. 

      The government increasing the marginal tax rate on income above P200,000

    • C. 

      The government increasing the amount of money spent on public health programs

    • D. 

      The government reducing pollution standards to allow firms to produce more output


  • 19. 
    An example of a contractionary monetary policy is
    • A. 

      An increase in the required reserve ratio

    • B. 

      A decrease in the discount rate

    • C. 

      A reduction in the taxes banks pay on their profits

    • D. 

      The central bank buying government securities in the open market


  • 20. 
    Which of the following sequence of events follows an increase in net taxes?
    • A. 

      AE↑ ⇒ Y↑ ⇒ Md↑ ⇒ r↑ ⇒ I↑ ⇒ AE↑.

    • B. 

      AE↓ ⇒ Y↑ ⇒ Md↓ ⇒ r↑ ⇒ I↓ ⇒ AE↓.

    • C. 

      AE↑ ⇒ Y↑ ⇒ Md↓ ⇒ r↓ ⇒ I↓ ⇒ AE↓.

    • D. 

      AE↓ ⇒ Y↓ ⇒ Md↓ ⇒ r↓ ⇒ I↑ ⇒ AE↑.


  • 21. 
    The severity of the crowding-out effect will be reduced if
    • A. 

      The central bank increases the money supply at the same time the federal government increases government spending.

    • B. 

      the central bank decreases the money supply at the same time the federal government increases government spending.

    • C. 

      The central bank does not change the money supply when the government increases government spending.

    • D. 

      business firms become pessimistic about the future.


  • 22. 
    If the Fed decreases the money supply at the same time the federal government decreases government spending, the crowding-out effect
    • A. 

      Will not be affected.

    • B. 

      Will be increased.

    • C. 

      Will be reduced.

    • D. 

      Could either increase or decrease depending on the sensitivity of planned investment to the interest rate.


  • 23. 
    If planned investment is sensitive to the interest rate, an increase in the interest rate causes the
    • A. 

      Aggregate expenditure curve to shift down.

    • B. 

      Aggregate expenditure curve to shift up.

    • C. 

      Long-run aggregate supply curve to shift out.

    • D. 

      Investment demand schedule to shift to the right.


  • 24. 
    If you are concerned that the inflation rate is too high, which of the following policies would you recommend?
    • A. 

      A decrease in the money supply

    • B. 

      An increase in the money supply

    • C. 

      A decrease in income tax rates

    • D. 

      An increase in government spending


  • 25. 
    The policy mix of a contractionary fiscal policy and a contractionary monetary policy would cause output to ________, and interest rates to ________.
    • A. 

      Decrease; increase, decrease, or remain unchanged

    • B. 

      Decrease; decrease

    • C. 

      Decrease; increase

    • D. 

      Increase, decrease, or remain unchanged; decrease


  • 26. 
    The policy mix that would cause the interest rate to increase and investment to decrease, but have an indeterminate effect on aggregate output, is a mix of
    • A. 

      Expansionary fiscal policy and expansionary monetary policy.

    • B. 

      Contractionary fiscal policy and expansionary monetary policy.

    • C. 

      Expansionary fiscal policy and contractionary monetary policy.

    • D. 

      Contractionary fiscal policy and contractionary monetary policy.


  • 27. 
    A policy mix of an expansionary fiscal policy and an expansionary monetary policy would cause output to ________ and interest rates to ________.
    • A. 

      Increase; increase, decrease, or remain unchanged

    • B. 

      Increase, decrease, or remain unchanged; increase

    • C. 

      Decrease; increase

    • D. 

      Decrease; increase


  • 28. 
    In an economy, when the price level falls, consumers and firms buy more goods and services. This relationship is represented by the
    • A. 

      Aggregate expenditures curve.

    • B. 

      Aggregate demand curve.

    • C. 

      Short-run aggregate supply curve.

    • D. 

      Long-run aggregate supply curve.


  • 29. 
    Money demand is a function of all of the following EXCEPT
    • A. 

      Interest rate.

    • B. 

      Price level.

    • C. 

      Money supply.

    • D. 

      Aggregate output.


  • 30. 
    Which of the following sequence of events is TRUE?
    • A. 

      P↑ ⇒ Md↓ ⇒ r↑

    • B. 

      P↑ ⇒ Md↑ ⇒ r↓

    • C. 

      Y↑ ⇒ Md↓ ⇒ r↑

    • D. 

      Y↑ ⇒ Md↑ ⇒ r↑


  • 31. 
    As the price level in the economy increases, which of the following sequence of events occurs?
    • A. 

      Md↑ ⇒ r↑ ⇒ I↑ ⇒ AE↓

    • B. 

      Md↓ ⇒ r↑ ⇒ I↑ ⇒ AE↑

    • C. 

      Md↑ ⇒ r↑ ⇒ I↓ ⇒ AE↓

    • D. 

      Md↓ ⇒ r↑ ⇒ I↓ ⇒ AE↓


  • 32. 
    Which of the following statements is TRUE?
    • A. 

      The aggregate demand curve is the sum of all market demand curves in the economy.

    • B. 

      Each point on the aggregate demand curve corresponds to a point at which both the goods market and the money market are in equilibrium.

    • C. 

      The aggregate demand curve is a market demand curve.

    • D. 

      Only the goods market is in equilibrium at each point on the aggregate demand curve.


  • 33. 
    When changes in the price level cause changes in the interest rate and, thus, changes in aggregate output demanded, we call this effect
    • A. 

      The multiplier effect.

    • B. 

      The real wealth effect.

    • C. 

      The real income effect.

    • D. 

      The consumption link.


  • 34. 
    When the general price level rises,
    • A. 

      Consumption falls as a result of the real wealth effect.

    • B. 

      Consumption increases as a result of the multiplier effect.

    • C. 

      Consumption increases as a result of the multiplier effect.

    • D. 

      Investment rises as a result of the real wealth effect.


  • 35. 
    At every point along the aggregate demand curve, the level of aggregate output demanded is
    • A. 

      Greater than planned aggregate expenditure.

    • B. 

      Less than planned aggregate expenditure.

    • C. 

      Equal to planned aggregate expenditure.

    • D. 

      Unrelated to the concept of planned aggregate expenditure.


  • 36. 
    A decrease in the quantity of money supplied at a given price level causes
    • A. 

      No change in aggregate demand.

    • B. 

      A decrease in aggregate demand.

    • C. 

      An increase in aggregate demand.

    • D. 

      An increase in aggregate supply.


  • 37. 
    An increase in government purchases shifts the ________ curve to the ________.
    • A. 

      Aggregate demand; left

    • B. 

      Aggregate supply; left

    • C. 

      Aggregate demand; right

    • D. 

      Aggregate supply; right


  • 38. 
    A decrease in net taxes at a given price level leads to
    • A. 

      No change in aggregate demand.

    • B. 

      An increase in aggregate demand.

    • C. 

      A decrease in aggregate demand.

    • D. 

      A decrease in aggregate supply.


  • 39. 
    The aggregate demand shifts to the left if
    • A. 

      The government increases spending.

    • B. 

      The central bank sells government bonds.

    • C. 

      The government decreases taxes.

    • D. 

      The central bank decreases the required reserve ratio.


  • 40. 
    Each point on the LM curve represents the equilibrium point in the
    • A. 

      Goods market for the given interest rate.

    • B. 

      Money market for the given value of aggregate output.

    • C. 

      Goods market for the given level of government spending.

    • D. 

      Money market for the given level of the money supply.


  • 41. 
    Each point on the IS curve represents the equilibrium point in the
    • A. 

      Goods market for the given level of government spending.

    • B. 

      Money market for the given value of aggregate output.

    • C. 

      Goods market for the given interest rate.

    • D. 

      Money market for the given level of the money supply.


  • 42. 
    The curve that illustrates the positive relationship between the equilibrium values of aggregate output and the interest rate in the money market is the
    • A. 

      Money demand curve.

    • B. 

      Money supply curve.

    • C. 

      LM curve.

    • D. 

      IS curve.


  • 43. 
    The aggregate supply curve
    • A. 

      Is the sum of the individual supply curves in the economy.

    • B. 

      Is a market supply curve.

    • C. 

      Embodies the same logic that lies behind an individual firmʹs supply curve.

    • D. 

      Relates output with the price level.


  • 44. 
    It is very important to distinguish between the short run and the long run when we are discussing
    • A. 

      The aggregate demand.

    • B. 

      The aggregate expenditures.

    • C. 

      The aggregate supply.

    • D. 

      Changes in the price level.


  • 45. 
    If the economy is operating on the relatively vertical segment of the aggregate supply curve, an increase in aggregate demand causes a ________ change in the price level and a ________ change in output.
    • A. 

      Small; small

    • B. 

      Big; big

    • C. 

      Big; small

    • D. 

      Small; big


  • 46. 
    Coal is used as a source of energy in many manufacturing processes. Assume a long strike by coal miners reduced the supply of coal and increased the price of coal. This would cause
    • A. 

      The short-run aggregate supply curve to shift to the right.

    • B. 

      The short-run aggregate supply curve to become flatter.

    • C. 

      The short-run aggregate supply curve to shift to the left.

    • D. 

      The short-run aggregate supply curve to become nearly vertical at all levels of output.


  • 47. 
    The type of unemployment that arises during recessions is known as
    • A. 

      The natural rate of unemployment.

    • B. 

      Cyclical unemployment.

    • C. 

      Structural unemployment.

    • D. 

      Frictional unemployment.


  • 48. 
    If you hear a person saying ʺI lost my job because I was replaced by a machine,ʺ you should conclude that this person is ________ unemployed.
    • A. 

      Cyclically

    • B. 

      Structurally

    • C. 

      Frictionally

    • D. 

      Seasonally


  • 49. 
    The unemployment rate is
    • A. 

      The number unemployed divided by the labor force.

    • B. 

      The number unemployed divided by the number employed.

    • C. 

      The number unemployed divided by the population.

    • D. 

      The difference between the population and the number employed divided by the population.


  • 50. 
    Suppose the wage rate in the labor market is $15 and the demand for labor decreases. If wages are sticky,
    • A. 

      Unemployment decreases.

    • B. 

      Unemployment increases.

    • C. 

      Unemployment stays the same.

    • D. 

      Wages decrease to eliminate the surplus.


  • 51. 
    Suppose that airline workers are laid off during a recession because of an unspoken agreement between airline workers and airline executives that wages will not be reduced. This example is consistent with the
    • A. 

      Relative-wage explanation of unemployment.

    • B. 

      Explicit contract explanation of unemployment.

    • C. 

      Implicit contract explanation of unemployment.

    • D. 

      Efficiency wage explanation of unemployment.


  • 52. 
    Which of the following arguments is NOT offered to explain the existence of ʺstickyʺ wages?
    • A. 

      The social contract explanation

    • B. 

      The relative-wage explanation

    • C. 

      The fact that labor contracts donʹt exist

    • D. 

      The explicit contract explanation


  • 53. 
    Which of the following is NOT a reason why firms pay efficiency wages?
    • A. 

      To reduce turnovers

    • B. 

      To abide by minimum wage laws

    • C. 

      To improve morale

    • D. 

      To reduce shirking of work


  • 54. 
    What sequence of events results from a decrease in aggregate demand?
    • A. 

      The price level falls, inventories decline, firms respond by increasing output and employment.

    • B. 

      The price level falls, inventories increase, firms respond by reducing output and employment.

    • C. 

      The price level rises, inventories decline, firms respond by increasing output and employment.

    • D. 

      The price level rises, inventories increase, firms respond by increasing output and employment.


  • 55. 
    The price of one countryʹs currency in terms of another countryʹs currency is the
    • A. 

      Balance of trade.

    • B. 

      Exchange rate.

    • C. 

      Terms of trade.

    • D. 

      Currency valuation.


  • 56. 
    Which of the following increases the price of the dollar relative to the peso?
    • A. 

      An increase in the supply of dollars

    • B. 

      An increase in the demand for pesos

    • C. 

      An increase in the demand for dollars

    • D. 

      A decrease in the supply of pesos.


  • 57. 
    Which of the following decreases the price of the dollar relative to the British pound?
    • A. 

      A decrease in the supply of dollars

    • B. 

      A decrease in the demand for pounds

    • C. 

      An increase in the demand for dollars

    • D. 

      An increase in the supply of dollars.


  • 58. 
    Imports
    • A. 

      Bring foreign exchange, and thus they are registered as credit in the balance of payments.

    • B. 

      Bring foreign exchange, and thus they are registered as debit in the balance of payments.

    • C. 

      Cause foreign exchange to leave the country, and thus they are registered as credit in the balance of payments.

    • D. 

      Cause foreign exchange to leave the country, and thus they are registered as debit in the balance of payments.


  • 59. 
    The difference between a countryʹs merchandise exports and its merchandise imports is the
    • A. 

      Balance of payments.

    • B. 

      Capital account.

    • C. 

      Current account.

    • D. 

      Balance of trade.


  • 60. 
    When a countryʹs exports of goods are greater than its imports of goods in a given period, it has a
    • A. 

      Trade deficit.

    • B. 

      Capital account surplus.

    • C. 

      Trade surplus.

    • D. 

      Current account deficit.


  • 61. 
    The balance of payments is divided into two major accounts, the
    • A. 

      Current account and the trade account.

    • B. 

      Current account and the capital account.

    • C. 

      Current account and the reserve account.

    • D. 

      Trade account and the capital account.


  • 62. 
    An Italian citizen buys a U.S. bond. This transaction will be entered as
    • A. 

      A credit in the U.S. current account.

    • B. 

      A credit in the U.S. capital account.

    • C. 

      A debit in the U.S. current account.

    • D. 

      A debit in the U.S. capital account.


  • 63. 
    Planned aggregate expenditure in an open economy equals
    • A. 

      C + I + G - IM.

    • B. 

      C + I + G + EX.

    • C. 

      C + I + GC + I + G + EX + IM

    • D. 

      C + I + G + EX - IM.


  • 64. 
    If planned aggregate expenditures are $400 billion, consumption is $120 billion, investment is $60 billion, government spending is $70 billion, there is a
    • A. 

      Trade surplus of $150 billion.

    • B. 

      Trade surplus of $250 billion.

    • C. 

      Trade deficit of $650 billion.

    • D. 

      Trade balance.


  • 65. 
    If the MPM is 0.1, then a $3,500 increase in income will
    • A. 

      Increase imports by $35,000.

    • B. 

      Increase imports by $350.

    • C. 

      Increase exports by $35,000.

    • D. 

      Increase exports by $350.


  • 66. 
    The open economy multiplier will decrease if
    • A. 

      The MPC decreases.

    • B. 

      The MPM decreases.

    • C. 

      Either the MPM or the MPC decreases.

    • D. 

      The MPM increases.


  • 67. 
    The open-economy multiplier ________ the closed-economy multiplier.
    • A. 

      Is larger than

    • B. 

      Equals

    • C. 

      Is smaller than

    • D. 

      Can be smaller or larger, depending on the size of MPM and MPC


  • 68. 
    Japan imports over 90% of its consumption of oil. If the price of oil increases, Japanʹs
    • A. 

      Aggregate demand curve shifts to the right.

    • B. 

      Aggregate supply curve shift to the right.

    • C. 

      Aggregate supply curve shifts to the left.

    • D. 

      Aggregate planned expenditures increase.


  • 69. 
    If two countries donʹt trade with each other, an increase in the price level in one country
    • A. 

      Increases the price level in the other country.

    • B. 

      Decreases the price level in the other country.

    • C. 

      Increases the price level in the other country then decreases it.

    • D. 

      Does not affect the price level in the other country.


  • 70. 
    An increase in U.S. exports to Japan ________ the demand for U.S. dollars and ________ the supply of yen.
    • A. 

      Increases; increases

    • B. 

      Decreases; increases

    • C. 

      Increases; decreases

    • D. 

      Decreases; decreases


  • 71. 
    More German companies start to invest in the United States. This will lead to a(n)
    • A. 

      Decrease in the demand for dollars and an increase in the demand for euro.

    • B. 

      Increase in the supply of dollars and a decrease in the demand for euro.

    • C. 

      Increase in the demand for dollars and a decrease in the supply of euro.

    • D. 

      Increase in the demand for dollars and an increase in the supply of euro.


  • 72. 
    The rise in value of the Mexican peso relative to the Canadian dollar is a(n)
    • A. 

      Depreciation of the peso.

    • B. 

      Appreciation of the peso.

    • C. 

      Weakening of the peso.

    • D. 

      Floating of the peso.


  • 73. 
    Suppose the exchange rate between the United States and Japan changed from $1 =150 yen to $1 = 140 Yen, which of the following statements is TRUE?
    • A. 

      The dollar depreciated

    • B. 

      The yen depreciated

    • C. 

      The price of yen in dollars decreased

    • D. 

      The price of dollars in yen increased


  • 74. 
    A Big Mac costs $3 in the United States and 2 euros in Spain. The purchasing power parity theory would predict that the exchange rate in the long run is
    • A. 

      $1 = 1.5 euros.

    • B. 

      $1 = 0.67 euro.

    • C. 

      $1 = 6 euros.

    • D. 

      1 euro = $0.67.


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