ECO403 Midterm Quiz Mega File by Shahzad Sadiq

3) Gross domestic product measured in terms of the prices of a fixed, or base, year is:

Base GDP. Current GDP. Real GDP. Nominal GDP.

4) The number of people unemployed equals:

The number of people employed minus the labor force. The labor force plus the number of people employed. The number of people employed divided by the labor force. The labor force minus the number of people employed.

Q5. Keeping in mind the functions of money, which one of the following is not money?

Currency Checks Credit cards

Time deposits

Q6. Which of the following would not be included in M2?

Demand deposits Checking accounts Money market accounts

7) The relationship between consumer spending and income is known as the:

45-degree line. Consumption function. Investment function. Consumer price index.

8) All of the following statements about the marginal product of capital MPK are true

EXCEPT:

MPK = f(k + 1) - f(k). MPK tends to decline as k increases. When there is only a little capital, MPK is very small. MPK is equal to the slope of the production function y = f(k).

9) A rightward shift in the aggregate demand curve can be caused by:

An increase in government spending. An increase in money supply. A decrease in taxes.

10. The aggregate supply curve in the short run is different from the aggregate supply curve in the long run due to:

The recurring nature of supply shocks. The existence of sticky prices in the short run. The wealth effect. The crowding out effect.

11) Fiscal policy shifts the:

The short run aggregate supply curve. The long run aggregate supply curve. Full employment level of output. The aggregate demand curve.

12) If wages are sticky downward, an increase in labor:

Demand increases the wage rate. Demand decreases the wage rate. Supply increases the wage rate.

Q13. Which of the following would a macroeconomist consider as investment?

Julie buys a government bond. Fred purchases 100 shares of stock in Microsoft. Tom buys a new tractor for his farm. Jane buys a new car.

14) The nominal interest rate is:

Unadjusted for the effects of inflation. The interest rate quoted in financial markets. Both unadjusted for the effects of inflation and the interest rate quoted in financial markets.

15) If interest rates increase, people will most likely hold:

More bonds and less cash. Less bonds and less cash. More bonds and more cash. Less bonds and more cash.

16. Intermediate goods are counted in the calculation of GDP.

True

False

17. Structural unemployment is the unemployment resulting from real wage rigidity and job rationing.

True

False

18. As income rises, average propensity to consume (APC) falls.

True

False

19. Adaptive expectation is an approach that assumes that people base their expectations on all available information, including information about current and prospective future policies.

True