sample macro test 2

old macro test

TEST 2 MACRO FALL ____________

 

2. Put your name on each page (protection in the event pages should become separated.)

3. If you need additional space to work, use any paper you deem appropriate, but put the question number and your name on each page.

4. This is an open book, open note exam. You may use notes, text, laptop, cheat sheet, or any other resource except your neighbor, your cell phone or your laptop email client. So, turn off and put away all cell phones and do not open your Outlook, Outlook Express, Yahoo Mail or any other mail client.

5. This is an open book, open note test. Therefore, I expect you to provide clear, complete answers. For example, in each essay question, I expect you to not only draw the relevant graph, but also to provide reasoned explanations for the impact (shown in your graph and described in words. As always, I am just as interested in WHY, as I am in the specific answer. And, as always, the emphasis is on what happens to the equilibrium price and/or output, elasticity or other final outcome--unless otherwise specified.

6. Points will be lost for failure to label axes, lines in graphs, for failure to write in complete sentences where applicable, and for failure to define all symbols used. Graphs without an explanation are meaningless, so give a complete description of what changed and why in each graph which you draw. Remember that the reader of this test is not a mind reader. You will be graded only on what you write, not what you meant to say.

7. Do not ask for more time. This time is a one hour test and you are given 1 hour and 15 minutes. The proctor will take up the test after an hour and 15 minutes.

8. Questions are self-explanatory, but if you have doubt, just explain your assumptions or justification. Partial credit is given.

9. Good luck ! And, leave quietly when you are finished.

 

 

 

 

 

 

 

NAME_____________________________________________________________________

 

 

 

CLASS TIME (eg, MW 11:00am) _______________________________________________

Essay Question:

3. Which of the following is infrastructure?

a. Highways.

b. Bridges.

c. Airports.

d. All of the above.

4. If an economy’s population grows at 3 percent and real GDP grows at 2 percent, then:

a. per capita real GDP is declining.

b. the economy’s standard of living is increasing.

c. per capita real GDP is negative.

d. per capita real GDP is growing.

e. the economy is experiencing unemployment.

 

Exhibit 1 Nation of GoodHope

5.

a. I

b. II

c. III

d. IV

e. V

 

Exhibit 1 shows the production possibility curve of the nation of GoodHope. Based only on this information, the point which would produce the highest rate of growth would be:

Instructions:

1. Answer all questions. The points or value assigned to each is given with the question. Question 50 points Read and follow the instructions on page 1.

Identify the three ranges of the Aggregate Supply curve . Graph and explain the impact of an increase in Aggregate Demand in each segment. Be specific. Label everything. Define any symbols used. Organize your thoughts before you start writing.

MULTIPLE CHOICE . 200 points You get to miss one free. Each problem is worth 8 points, there are 25 questions. Answer all questions. Circle the correct answer and write the letter in the left margin. Remember partial credit is possible, so explain where you are uncertain.

1.

a. a central authority.

b. individual buyers and sellers.

c. the traditional methods.

d. none of the above.

2. In a market economy, buyers and sellers communicate their intentions to one another through:

a. government planners.

b. negotiations overseen by government agencies.

c. elected officials.

d. prices.

In a command economy, the basic economic questions are answered by:

6. If GoodHope is operating at point “IV”,

a. GoodHope is not operating efficiently

b. GoodHope could produce more capital goods without giving up any consumer goods by more efficiently combining its inputs.

c. both a and b are true.

 

Using the table above, answer the next two questions.

7. Look at the solid black, horizontal line running parallel to the dashed line. If the Annual real GDP growth is equal to that line:

a. the unemployment rate is zero.

b. the growth rate of the economy as measured by the change in Annual Real GDP is negative

c. the growth rate of the economy as measured by the change in Annual Real GDP is zero

d. the growth rate of unemployment is below 3%

8. Growth in the economy (as measured above) between 1980 and 1985 was below the long-term average for the period shown.

a. true

b. false

9. Allocative efficiency and productive efficiency are the same thing.

true

false

10 . If the marginal propensity to consume is 75%, the Aggregate Demand multiplier is :

5

10

1

none of the above

 

 

 

11. . If the marginal propensity to consume is 80% and there is an autonomous increase of $100 in government spending that is aimed at consumer consumption, the total maximum increase in Aggregate Demand will be

a. $100

b. $400

c. $500

d. $80

12. If a change in disposable income of $10 causes a corresponding change in total consumption of $80, then Aggregate Demand will increase by $800 with an autonomous increase in consumption of $10.

true

false

13. GDP is a measure of national income and expenditures, as well as a measure of 'economic activity' or economic wellbeing.

true

false.

14. The FED controls interest rates, not the money supply .

a. true

b. false

15. We have been following several interest rates. The prime rate has recently gone down from 8.5% to 8.25%.

a. true

b. false

16. The difference between CPI-U and CPI-W is that one applies to all urban consumers and one applies to urban wage and clerical workers.

a. true

b. false

17. We read and discussed an article about Zimbabwe and its current macro-economic troubles. Which of the following is true as it relates to that article and the Zimbabwe economy.

a. The government continues to make the problem of inflation worse by printing money.

b. Inflation in Zimbabwe can be characterized by the term “hyper-inflation” and is over 1,000 percent per year.

c. The unemployment rate in Zimbabwe has risen to 70% or more.

d. Capital continues to flow out of the country, with no hope for a change in sight.

e. all the above

f. both a and b are correct, but not c and d.

18.

Individual Consumption for Bob

0.6

0.4

0.2

0.1

19. In the table above, Bob’s ‘after tax’ income increases from zero to ten thousand dollars.

a. true

b. false

20. In the table above, Bob is saving $4,000 when his disposable income is $13,000.

a. true

b. false

 

21. Other factors held constant, a decrease in resource prices will cause

a. the aggregate demand curve to shift leftward

b. the aggregate demand curve to shift to the right

c. the aggregate supply curve to shift leftward

d. the aggregate supply curve to shift to the right.

22. Keynesian economic theory

a. came into existence during and as a result of the great depression.

b. assumes markets are self-correcting because of the nature of equilibrium, and therefore, precludes intervention in the market by the government.

c. is another term for ‘Classical Economic Theory”

d. none of the above

23. Assume that at a given point in time, Consumer Spending is $5000, Investment is $1,000, Exports are $1,000, Government Spending is $2,000 and Imports are $2,000. Gross Domestic Product is

a. $11,000

b. $10,000

c. $ 9,000

d. $ 7,000

24. If the Aggregate Demand multiplier is 4, an autonomous increase in the consumer spending of $1,000 will lead to

a. a $1,000 change in Aggregate Demand

b. a $1,000 change in Aggregate Supply

c. a $4,000 change in Aggregate Demand

d. a $4,000 change in Aggregate Supply.

25. If you are a 15 year old male seeking employment, but unable to find a job, will the Bureau of Labor Statistics count you in its unemployment rate calculation?

a. yes

b. no

According to the table below, the MPC is.

 

250/1000 points