This multiple-choice test consists of a total of eighty (80) multiple choice questions. The first sixty (60) questions are compulsory for all students. The other twenty (20) questions are for extra credits and are therefore optional for all students.

Choose the best answer among the options for each of the question below

Do all Questions

(1)Which of the following statements is true?

Principle#6:

(a)Is one of three (3) principles that are organized in its category

(b)States that “Markets are usually a good way to organize economic activity”

(c)Is organized in category#2

(d)All of the above

(2)Which of the following pairs of principles is organized in category#3?

(a)”The cost of something is what you give up to get it” and “Trade makes everyone and every nation better off”

(b) “Rational people think and make decision at the margin” and “People face trade-offs”

(c)”Trade makes everyone and every nation better off” and “Government can sometimes improve market outcomes”

(d) “There is a short run trade-off between inflation and unemployment and “A country’s standard of living depends on its ability to produce goods and services”

(3)Which of the following statements is true?

Marketplaces are:

(a)Markets

(b)Physical locations where trade occurs between buyers and sellers

(c)Have a demand and supply side

(d)All of the above

(4)Which of the following statements about normative economic analysis is false?

(a)Their validity can be tested by statistical methods and experiments

(b)It is a type of analysis that is descriptive in character

(c)This type of economic analysis poses the question what is about an economic phenomenon?

(d)All of the above

(5)The average price of regular unleaded gasoline in Fairfax County should be about $2.15. This statement is an example of:

(a)A normative statement

(b)A positive statement

(c)A statement of the fallacy of composition

(d)A deductive statement

(6)Which of the following statements is true?

The fallacy of composition is:

(a)A flawed statement

(b)The confusion of the whole and the parts of the whole

(c)A very common analytical error

(d)All of the above

(7)The Federal Reserve Bank is:

(a)Another name for the Department of Commerce

(b)The Central Bank of the USA

(c)A Department in the Department of Treasury

(d)None of the above

(8)Which of the following statements is false?

The Federal Reserve Bank was established by an Act of Congress:

(a)On July 23rd 1945

(b)On December 23rd 1915

(c)On October 10th 1913

(d)All of the above

(9)Which of the following statements is true?

When net export is positive in an economy, the GDP:

(a)Increases

(b)Decreases

(c)A BOT surplus results

(d)(a) or (c) above

(10)Suppose you are told that the monetary value of gross investment or Ig in an economy is equal to $45b in 2012 and the monetary value of the economy’s GDP is equal to $280b in the same year, what would be the rate of investment in the economy in 2012?

(a)25 percent

(b)35 percent

(c)More information needed

(d)None of the above

(11)Suppose a retired musician volunteers 1000 hours of her services to a group of young children in elementary schools each year, assuming that the market value of her services in a year are $50,000, a macroeconomist who says that the GDP of her country will increase by $50,000 is:

(a)Correct

(b)Incorrect

(c)(a) or (b) above

(d)More information needed to respond

Table#1-National Income Accounts

National Income Accounts

$Billions

Consumption expenditures

$2568

Interest

190

Corporate profit

150

Depreciation

200

Rent

70

Gross domestic investment

1250

Compensation of employees

830

Federal government expenditures

530

State government expenditures

245

Local government expenditures

140

Exports

220

Imports

270

(12)The GDP in Table#1 is equal to:

(a)$4675b

(b)$5430b

(c)$3420b

(d)None of the above

(13)In Table#1, NDP equals:

(a)$2756b

(b)$4560b

(c)$4320b

(d)None of the above

(14)As shown in Table#1, the GDP will___________________ because net export is________________________:

(a)Decrease, positive

(b)Increase, negative

(c)More information needed

(d)None of the above

(15)The GDP of a country includes only____________

(a)Intermediate and legitimate goods and services

(b)Final and legitimate goods and services

(c)Intermediate inputs

(d)Final and illegitimate goods and services

(16)Which of the following is the monetary value of capital consumption allowances for the economy represented in Table#1 above?

(a)$450b

(b)$200b

(c)$630b

(d)None of the above

(17)Which of the following is aggregate government expenditures or G in Table#1 above?

(a)$890b

(b)$905b

(c)$915b

(d)None of the above

(18)Which of the following expenditures would not be included in a country’s GDP in the year 2015?

(a)Purchase of a new refrigerator that was made in 2012

(b)Purchase of tickets to Jazz concerts in 2005

(c)Purchase of diamond bracelets made in 2009

(d)None of the above

(19)Which of the following is an example of financial investment spending in an economy?

(a)The construction of a neurosurgical hospital in Cleveland

(b)The purchase of 100 drilling machines for deep water drilling

(c)The purchase by the CEO of a company of $120m worth of stocks

(d)A multimillion dollar renovation of the physical structure of a mall

(20)Suppose the gross personal incomes of households in an economy are equal to $860 billion and the personal disposable incomes of the same households are equal to $775 billion, what would be the aggregate taxes of these households?

(a)$180 billion

(b)$88 billion

(c)$75 billion

(d)None of the above

(21)Generally, a recession is defined as a decline in real GDP lasting at least:

(a)1 year

(b)6 months

(c)3 months

(d)One quarter

(22)Suppose the market value of lawn mowing services performed by members of households in the US in 2016 was $20b, macroeconomists who say that US GDP in 2016 would have increased by $20b, would be_______________________________

(a)Correct

(b)Incorrect

(c)More information needed for an answer

(d)None of the above

(23)Another name for undistributed corporate profits is:

(a)Corporate taxes

(b)Personal income

(c)Retained earnings

(d)Transfer payments

(24)Which of the following statements is false?

If net export is positive in an economy, it implies that:

(a)GDP will increase

(b)There is a surplus on the BOT

(c)There is a deficit on the BOT

(d)The value of exports is greater than the value of imports

Table#2-Macroeconomic Data

Year

GDP in Current dollars (billions)

Implicit price deflator

GDP in real or 1982 dollars (billions)

Population (millions)

GDP per capita 1982 dollars

1970

1,215.5

44.0

3,417.8

205.1

11,788

1971

46.4

2,483.6

207.7

1972

1,312.6

4,608.2

209.9

12,426

1973

1,359.3

2,746.1

12,959

1974

1,472.8

54.0

213.9

1975

59.3

5,695.4

216.0

1976

1,882.8

2,825.3

12,960

1977

1,990.5

67.3

220.2

1978

75.2

3,115.9

12,998

1979

78.8

3,183.0

225.1

1980

2,732.0

3,151.1

13,839

(25)Which of the following is the GDP in current dollars in 1975 in Table#2 above?

(a)$31,265.7b

(b)$2,343.2b

(c)$3,377.4b

(d)$6,876.4b

(26)Which of the following is the GDP expressed in constant dollars in 1973 in Table#2 above?

(a)$3,654.4

(b)$1,359.3

(c)$2,746.1

(d)$3,151.1

(27)Which of the following is the GDP deflator in 1971 in Table#2 above?

(a)76.4

(b)68.8

(c)46.4

(d)None of the above

(28)Suppose in 1995, the nominal GDP of China was $5,744 billion and the GDP deflator was 140. China’s GDP expressed in constant dollars in 1996 is:

(a)$5,376b

(b)$4,103b

(c)$6,286b

(d)None of the above

(29)Which of the following statements about nominal export earnings is true?

(a)They are adjusted for inflation

(b)They are not adjusted for inflation

(c)Their dollar value is less than the dollar value of real exports

(d)None of the above

(30)Suppose you are told that the GDP Deflator in an economy for 1998 was 180 and its GDP Deflator in 2010 was 220, what was the rate of inflation for the economy over the years 1998-2010?

(a)26 percent

(b)19 percent

(c)More information needed

(d)None of the above

(31)Which of the following pairs of countries is classified as a newly industrialized nation?

(a)South Africa and Albania

(b)South Korea and Brazil

(c)Peru and Taiwan

(d)None of the above

(32)Economic development in any society encompasses:

(a)Distribution of income

(b)Legal system

(c)Education

(d)All of the above

(33)Suppose the rate of GDP growth expressed in constant dollars is 8.4 percent annually and the rate of population growth is 5.2 percent annually during the period 1990-2005, then the rate of constant GDP per capita growth during the cited period is:

(a)1.2 percent

(b)3.2 percent

(c)2.2 percentp

(d)More information needed

(34)According to the Rule of 70, the rate of real GDP growth for the economy referenced inQ#33 will take ____________________to double.

(a)6.3 years

(b)8.3 years

(c)9.5 years

(d)22 years

(35)Which of the following statements is true?

The international trade policy known as protectionism is:

(a)A policy tool for development in and developing countries

(b)Employed by governments to protect young industries from foreign competition

(c)An explicitly anti-free trade development policy

(d)All of the above

(36)Which of the following statements is true

The development strategy known as EOI is:

(a)A pro-free trade industrial policy

(b)A free market industrial policy

(c)A protectionist industrial policy

(d)An anti-growth strategy

(37)Which of the following statements is false?

The theory of comparative advantage is:

(a)A 17th century international trade theory

(b)A trade theory based on specialization of production due to relative cost advantage

(c)A trade theory that was developed by the English political economist David Ricardo

(d)None of the above

(38)Which of the following statements is false?

The US and Britain were able to achieve relatively rapid industrial development because of:

(a)Anti-free trade industrial policies

(b)Strong protectionist policies

(c)Strong interventionist fiscal policies such as subsidies and tax breaksfor investors

(d)All of the above

(39)Which of the following statements is false?

A quota is known as a:

(a)An anti-free trade growth and development policy

(b)Quantitative restriction on imports of a good

(c)A non-tariff barrier

(d)None of the above

(40)The GDP expressed in current dollars in 1973 and 1989 is ______________ and _____________given that the CPI in 1973 is 140 and 160 in 1989.

(a)$8246b and $7864b

(b)$7456b and $6438b

(c)$1103b and $1352b

(d)$1435b and $2253b

Table#3-Disposable Income, Consumption and Savings Data

Disposable Income or (Yd)

Consumption or (C)

Saving or (S)

$ 0

$ 500

$

14,500

-1200

18,650

850

24,785

32,596

36,768

0

48,655

(41)Which of the f

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