Question Douglas, Spring 2010  Econ 202 Final Exam

Econ 202 Final Exam

Multiple Choice. 2 points each.

1. According to the long-run Phillips curve, in the long run monetary policy influences
a. the unemployment rate but not the inflation rate.
b. both the inflation rate and the unemployment rate.
c. the inflation rate but not the unemployment rate.
d. neither the unemployment rate nor the inflation rate.

Figure 4-9

2. Refer to Figure 4-9. If the price is currently $8, then
a. there is currently a shortage of 10 units, which will make the price rise by $2.
b. there is currently a surplus of 20 units, which will make the price rise by $2. c. there is currently a surplus of 10 units, which will make the price rise by $2. d. there is currently a shortage of 20 units, which will make the price rise by $2.
3. An assistant manager at a restaurant gets a $100 a month raise. He figures that with his new monthly salary he cannot buy as many goods and services as he could buy last year.
a. His real and nominal salary have fallen.
b. His real and nominal salary have risen.
c. His real salary has risen and his nominal salary has fallen.
d. His real salary has fallen and his nominal salary has risen.
4. As an alternative to selling shares of stock as a means of raising funds, a large company could, instead,
a. use equity finance.
b. purchase bonds.
c. sell bonds.
d. invest in physical capital.
5. Suppose the basket of goods selected to calculate cost $50 in 2002, $55 in 2004, and $60 in 2006. Using
2004 as the base year, the value of the CPI in 2006 was about
a. 600. b. 109. c. 91.6. d. 83.

6. The Fed can influence unemployment in a. the long run, but not in the short run. b. the short run and in the long run.
c. neither the short nor the long run.
d. the short run, but not in the long run.
7. An increase in the price level and a reduction in output would result from
a. tax rebates.
b. declining government expenditures.
c. natural disasters such as hurricanes, floods, and droughts.
d. a fall in stock prices.
8. According to the blog post by James Hamilton discussed in class, since September 2008 the Fed has provided a tremendous amount of liquidity to mortgage markets, which it has financed primarily by
a. issuing long-term government bonds. b. more than doubling the money supply. c. raising taxes.
d. crediting banks’ excess reserve accounts at the Fed.
9. Which of the following statements is true?
a. The market prices of most resources have increased over the past 50 years because they are being used up.
b. Americans have a higher standard of living than Indonesians because American workers are more productive than Indonesian workers.
c. Productivity is calculated as hours worked divided by output produced.
d. All of the above are correct.
10. Wealth is redistributed from lenders (creditors) to borrowers (debtors) when inflation is
a. unexpectedly low.
b. high, whether it is expected or not.
c. unexpectedly high.
d. low, whether it is expected or not.

Figure 34-6.

11. Refer to Figure 34-6. If the economy is at point b, a policy to restore full employment would be
a. an increase in taxes.
b. an increase in the money supply.
c. a decrease in government purchases.