ECO403 Midterm Solved Quiz Mega File

MACROECONOMICS(EC0403)

Solved By Bright eyes

Q1. Which of the following equations is correct?

1. Real exchange rate = (exchange rate + domestic price level) / foreign price level
2. Exchange rate = (real exchange rate × domestic price level) / foreign price level
3. Real exchange rate = (nominal exchange rate × domestic price level) × foreign price level
4. Real exchange rate = (nominal exchange rate × domestic price level) / foreign price level

Correct answer: Exchange rate = (real exchange rate × domestic price level) / foreign price level

2. The difference between exports and imports in determining the GDP is known as the:

a)

Net exports

b) Import tariffs. c) Net imports. d) Net income

Q3. Unemployment that naturally occurs during the normal workings of an economy as people change jobs and move across the country is called

1. Structural unemployment.
2. Frictional unemployment.
3. Natural unemployment.
4. Cyclical unemployment.

Correct answer: Frictional unemployment.

Q4. The demand for labor curve shows:

1. An inverse relationship between the real wage and the number of workers who are willing to work.
2. That real wages are constant.
3. An inverse relationship between the real wage and the amount of labor hired.
4. A positive relationship

Correct answer: An inverse relationship between the real wage and the number of workers who are willing to work.

Q5. Which of the following statements about net exports is correct?

1. The term C + I + G understate domestic production of goods and services because it leaves out exports, which must be subtracted out of GDP to obtain the correct figure.
2. The term C + I + G overstates domestic production of goods and services because it

Correct answer: The term C + I + G overstates domestic production of goods and services because it

contains imports, which must be subtracted out of GDP to obtain the correct figure. C. The difference between exports and imports is negative when the country is a net exporter. Before 1976,

Q6. Which of the following equations is correct?

1. Nominal interest rate = real interest rate – inflation
2. Real interest rate = nominal interest rate + inflation
3. Real interest rate = nominal interest rate × inflation
4. Real interest rate = nominal

Correct answer: Real interest rate = nominal interest rate × inflation

Q7. If the U.S. real exchange rate increases, then U.S. ------------------ will fall and U.S. ---------------- will rise.

1. Imports; exports
2. Income; imports
3. Exports; income
4. Exports; imports

Correct answer: Imports; exports

Q8. Which one of the following could explain a shift to the right of the supply curve for a good?

1. The imposition of a tax on the good
2. A new supplier entering the market
3. A rise in firms’ wage costs
4. A rise in the price of the good

Correct answer: A new supplier entering the market

Q9. Which of the following is NOT included in M1?

1. Deposits in checking accounts
2. Deposits in checking accounts that pay interest
3. Currency held by the public
4. None of the given options

Correct answer: None of the given options

Q10. The circular flow is used to make the point that:

1. Households are both earners and spenders.
2. Production generates income.
3. Unemployment only occurs during a recession.
4. Rising prices never occur during times of unemployment

Correct answer: Households are both earners and spenders.

Q11. Currency held by the public is included in:

1. Neither M1 nor M2.
2. M2 only.
3. M1 only.
4. Both M1 & M2

Correct answer: Both M1 & M2

Q12. If Umar does not have a job and is not currently looking for work but has looked in the past, he is considered:

1. Not in the labor force.
2. Unemployed and in the labor force.
3. Unemployed.
4. Unemployed and not in the labor force.

Correct answer: Unemployed and in the labor force.

Q13. An asset that is included in M3 but not in M2 is:

1. Currency.
2. Checkable deposits.
3. Small-denomination certificates of deposit.
4. Large-denomination

14. A. A country sells more abroad than it purchases from abroad. B. Foreign firms open more stores in a country than the country opens in foreign countries. C. A country's firms open more stores abroad than foreign firms open in the country. D. A country purchases

Q15. Is the narrowest definition of the money supply?

1. Includes the most liquid forms of money.
2. Includes travelers' checks.
3. All of the given options
4. M!

E. M1