Econ 1040 Exam Review

17 Questions | Total Attempts: 14

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Economics Quizzes & Trivia

Questions and Answers
  • 1. 
    • A. 

      (20/80) x 100

    • B. 

      (30/80) x 100

    • C. 

      (20/60) x 100

    • D. 

      (20/100) x 100

  • 2. 
    • A. 

      84.5

    • B. 

      92.4

    • C. 

      105.0

    • D. 

      108.2

  • 3. 
    If national income increases by $20 million and consumption increases by $5 million, the marginal propensity to consume is
    • A. 

      4

    • B. 

      0.75

    • C. 

      0.5

    • D. 

      0.25

  • 4. 
    Ceteris paribus, an increase in interest rates would be represented by a movement from 
    • A. 

      AD 1 to AD 2

    • B. 

      AD 2 to AD 1

    • C. 

      Point A to point B

    • D. 

      Point B to point A

  • 5. 
    If aggregate expenditure is less than GDP, how will the economy reach macroeconomic equilibrium?
    • A. 

      Inventories will decline, and GDP and employment will rise.

    • B. 

      Inventories will rise, and GDP and employment will rise.

    • C. 

      Inventories will rise, and GDP and employment will decline.

    • D. 

      Inventories will decline, and GDP and employment will decline.

  • 6. 
    Given the equations for C, I, G, and NX below, what is the equilibrium level of GDP? C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400
    • A. 

      $4,333

    • B. 

      $7,100

    • C. 

      $8,778

    • D. 

      $79,000

  • 7. 
    Refer to figure. Suppose that investment spending increases by $10 million, shifting up the aggregate expenditure line and GDP increases from GDP 1 to GDP 2. IF the MPC is 0.9, then what is the change in GDP?
    • A. 

      $9 million

    • B. 

      $10 million

    • C. 

      $90 million

    • D. 

      $100 million

  • 8. 
    Imagine that you borrow $5,000 for one year and at the end of the year you repay the $5,000 plus $600 of interest. If the inflation rate was 4%, what was the real interest rate you paid?
    • A. 

      16 percent

    • B. 

      12 percent

    • C. 

      8 percent

    • D. 

      6 percent

  • 9. 
    Suppose your grandfather earned a salary of $12,000 in 1964. If the CPI is 31 in 1964 and 219 in 2010, then the value of your grandfather's salary in 2010 dollars is approximately
    • A. 

      $84, 775

    • B. 

      $63,830

    • C. 

      $37,200

    • D. 

      $26,280

  • 10. 
    What is investment in a closed economy if you have the following economic data? Y = $10 trillion C = $5 trillion TR = $2 trillion G = $2 trillion
    • A. 

      $2 trillion

    • B. 

      $3 trillion

    • C. 

      $5 trillion

    • D. 

      Cannot be determined without information on taxes (T)

  • 11. 
      Serena Haley Bracelets 8 9 Necklaces 16 12 What is Haley's opportunity cost of making a bracelet?
    • A. 

      3 bracelets

    • B. 

      1 1/3 necklaces

    • C. 

      2 necklaces

    • D. 

      3/4 of a bracelet

  • 12. 
      Serena Haley Bracelets 8 9 Necklaces 16 12 Which of the following statements is true?
    • A. 

      Haley has an absolute advantage in making necklaces and Serena in making bracelets

    • B. 

      Haley has an absolute advantage in making bracelets and Serena in making necklaces

    • C. 

      Serena has an absolute advantage in making both products

    • D. 

      Haley has an absolute advantage in making both products

  • 13. 
    Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?
    • A. 

      D no change, S decreases, P increases, Q increases

    • B. 

      S decreases, D no change, P increases, Q decreases

    • C. 

      D decreases, S no change, P and Q decrease

    • D. 

      D and S decrease, P and Q increase

  • 14. 
    The following equations represent the demand and supply for silver pendants. Qd = 50-2P Qs = -10+2P What is the equilibrium price (P) and quantity (Q - in thousands) of pendants?
    • A. 

      P = $15; Q = 20 thousand

    • B. 

      P = $20; Q = 15 thousand

    • C. 

      P = $10; Q = 30 thousand

    • D. 

      P = $50; Q = 10 thousand

  • 15. 
    Paul goes to Soprtsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is 
    • A. 

      $325

    • B. 

      $200

    • C. 

      $125

    • D. 

      $75

  • 16. 
    Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?
    • A. 

      An increase in the price of butter, a complement for white bread

    • B. 

      A decrease in the price of flour

    • C. 

      An increase in the price of rye bread, a substitute for white bread

    • D. 

      An increase in the price of flour

  • 17. 
    If an increase in income leads to a decrease in the demand for popcorn, then popcorn is
    • A. 

      A neutral good

    • B. 

      A normal good

    • C. 

      An inferior good

    • D. 

      A necessity