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Multiple Choice Answer Sheet


Section#: Multiple Choice Answer > TURN OVER

Short answers (34-35) 34

34 (equations here)


35 (equations here)

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potential GDP Based on the data in the table above, the economy will be in short-run equilibrium at aprice level ofA) 90B) 110C) 100D) 120paribus?A) disposable income increasesB) expected future profit rates are lower, while expected future household income ishigherC) the government reduces corporate taxesemployees1735Rental income37Proprietors income128Indirect taxes minussubsidies259Corporate profits-136Private Saving100028Gross domestic product equals expenditure equals _____30Investment equals _____31Which of the following is NOT a synonym for the economic situation described bypotential real GDP?A)

natural rate of unemploymentB)

full employmentC)

natural rate of inflation

Solutions to Exam # 2 1.

3 12.
1/100, 1/50, 3/100, 1/10 17.B

18.1.87 % 19.



10 25.



1905 30.904 31.

AD : Qd = 4.8 - P/100 LAS: Qs = 4

SAS: Qs = 2.8 + P/100

35.AD: Qd = 5 - P/100

LAS : Qs = 4.4 Growth rate = ln (4.4/4) = 0.095 ~ 9.5 %


Aggregate Demand:
P = -100*Q + 480

OR Q - 280

OR Q35.Aggregate Demand:
P = -100*Q + 500

OR Q - 280

OR Q4.44.0.
Macroeconomics 201

Problem Number Answer Problem Number Answer 1 B 18A 2 C 19B 3 C 20B 4 B 21D 5 C 22A 6 A 23A 7 D 24E 8 B 25E 9 D 26E 10 A 27D 11 C 28B 12 C 29B 13 B 30A 14 D 31A 15 D 32B 16 D

17 C

The world is composed of two countries, Farmeria and Securitania.

Each has 1000 workers, and each produces just two goods, guns and butter.

All workers in Farmeria have the same skills, as do all workers in Securitania; the skills differ between the two countries, however.

In Farmeria, each woday, or 1 gun.

In Securitania each worker can produce either 6 pounds of butter a day curves are not bowed because same, regardless of the amount being produced.C.

Compare the opportunity costs of producing is gun production cheaper?(2points)

in Farmeria is 10 pounds of butter per 1 Securitania.production point in each diagram.

How much of each good will be produced in each country?

What is the totaand butter? (2points)

Butter 2000 3000 1000 Half Production point Efficient Production(2000,0) 1000 Butter ( pounds of butter, 500 guns, 3000 pounds of butter is particularly skilled.

Show the production point in each diagram.

Compare the global r.

By a more effiThis question will consider the market for SUVs.

The supply curve for SUVs is a

schedule for SUVs is given by the following table:

Price Quantity 47,000 28 44,000 26 38,000 22 32,000 18 26,000 14 The demand) and the price ).

The demand can be represA)

Plot supply and demand curves for PB)

What is the equilibrium quantity and price of SUVs when P = $2? Label this point on your graph from part A.


The price of gasoline increases to $4 a gallon.

What is the new equilibrium quantity and price of SUVs? (2points)(Q = 16.5, P = $29,750) D)

Car manufacturers develop a new technolprice of gas is now $2 a gallon
multiple choice answer sheet

The governmeshortage, surplus, or equilibrium?

If there is an equilibrium, what is the price and quantity of SUVs?

If we are in a shortage or surplus, what is the magnitude of it? Supply and Demand plot for part A 88 44 34.25 19.5SMultiple Choice Instructions:

Choose the

answer given the information in the problem.

Write your answers on the answer1.

Economic models always attempt to:


include all details that characterize the real world.

concentrate on the essential causal elements of economic the same level of unrealistic assumptions to deal with complexity.2.

According to the examples given in cla good?

a Pepsi in the school cafeteria

Eating potatoes 3.

Which of the following statements ng the above plot?


The plot is scatter plot


The interest rate is co


The interest rate is in


The interest rate is in4.

In the above plot, the average annual increase in the interest rate from 1998 to
2001 of a percentage point


1/2 of a percentage point


greater than the average increase from 1997 to 2000 5.

The law of comparative advantage implies that in international trade:

that only countries with the highest productivity will gain.


countries should try to self-produce all inefficient producers can still gain from trade.


None of the above.

an example of a market failure

Is an example of an externality

Results from government interference in the price system

Raises consumer surplus 7.Efficient production implies that:

there is no discrimination in the work force


a producer is beyond the production possibility frontier.

more outputs could be produced without giving up some quantity

of another output.


the government has allocated all resources 35 20 2535Ski Hats4040 CD8.

Given the above PPF for a firm, if it is produce 15 more ski hats while prod


10 fewer coats


5 fewer coats


no more coats


7 more coats

9.The opportunity cost of producing an extr


zero ski hats


5 ski hats


15 ski hats


35 ski hats


The following statement accurately characterizes the US economy:

The US government both creates monopolies and breaks them up .


The US is a pure free market was belo


The US has not experienced a recession since World War II.11.

The effect of a US farm subsidies paid by the US government to the US farmers

Reduction of world

Reduction of incomes in

Loss of consumer surplus for US citizens

Higher payments to rich US farmers than poor US farmers.12.Which of the following is a traditional role of government in a market economy


Setting market efficient production income


Producing consumer goods 13.

A recession occurs when:


the average hourly wage falls below $15 per hour


the total output of the economy falls


government spending grows by more than 5 percent


All of the above 14.

Your income in February was $33 and your income in August was $850.


annual growth rate of your income between February and August was:

(Use the formula with natural logs!)
A.2475.8 percent

24.8 percent

324.9 percent

649.7 percent 15.

Which of the following does not shift the supply curve for eggs:

An imposition of a 4 cen


A bird virus kills 50% of the hen population


A bumper crop reduced the pric
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