Question Douglas, Spring 2010  Econ 202 Final Exam Multiple Choice. 2 points each.

Douglas, Spring 2010

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.
d. All of the above are correct.

12. Refer to Figure 34-6. Which of the following is correct?
a. An attempt by all households to increase their savings might have caused the shift from
AD1 to AD2.
b. A wave of optimism could move the economy from point a to point b.
c. If aggregate demand moves from AD1 to AD2, the economy will stay at point b in both the short run and long run.
d. All of the above are correct.
13. A change in expected inflation shifts
a. neither the short-run nor the long-run Phillips curve.
b. the long-run Phillips curve, but not the long run Phillips curve.
c. both the short-run and long-run Phillips curve right.
d. the short-run Phillips curve, but not the long run Phillips curve.
14. Suppose that a country imports $75 million of goods and services and exports $100 million of goods and services. What is the value of net exports?
a. $75 million b. -$25 million c. $25 million d. $175 million
15. The quantity of money has no real impact on things people really care about, such as the number of hours of work required to get the money to buy a car. Most economists would agree that this statement is true in
a. neither the long run nor the short run.
b. the long run, but not the short run. c. both the short run and the long run. d. the short run, but not the long run.
16. In which of the following cases was the inflation rate 10 percent over the last year? a. One year ago the price index had a value of 145 and now it has a value of 163. b. One year ago the price index had a value of 120 and now it has a value of 132. c. One year ago the price index had a value of 110 and now it has a value of 120. d. One year ago the price index had a value of 126 and now it has a value of 140.
17. People will want to hold less money if the price level
a. increases or if the interest rate increases. b. increases or if the interest rate decreases. c. decreases or if the interest rate increases. d. decreases or if the interest rate decreases.
18. The efficient markets hypothesis says that
a. stock prices do not follow a random walk.
b. only individual investors can make money in the stock market.
c. stocks prices reflect all publicly available information at all times.
d. All of the above are correct.
19. In the United States, a three-pound can of coffee costs about $5. If the exchange rate is about 0.6 euros per dollar and a three-pound can of coffee in Belgium costs about 4 euros. What is the real exchange rate?
a. 3/4 cans of Belgian coffee per can of U.S. coffee b. 4/5 cans of Belgian coffee per can of U.S. coffee c. 5/4 cans of Belgian coffee per can of U.S. coffee d. 4/3 cans of Belgian coffee per can of U.S. coffee

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