BSNS 113 Final Exam New Latest Version Best Studying
Material with All Questions from Actual Past Exam and
Correct Answer
According to the graph shown in the lecture slides, over the last several decades NZ's merchandise terms
of trade index has generally trended ---------- Correct Answer ------------ upward, meaning that NZ's
ability to purchase imports has generally increased.
In our analysis of a market economy, a market ---------- Correct Answer ------------ consists of all of the
people, i.e., potential buyers and sellers, whose interactions determine the market price.
As the economy enters a boom we can generally expect that : ---------- Correct Answer ------------
inflation will increase and the unemployment rate will decrease.
Now suppose, using the information from the previous problem, that the number of people who have jobs
falls to 99,000 and the labour force falls to 100,000. Then: ------------ Correct Answer ------------- the
unemployment rate declines
Which of the following best illustrates the medium of exchange function of money? ------------ Correct
Answer ------------- You pay for your tall latte using currency
The inflation tax taxes holders of money by: ------------ Correct Answer ------------- shrinking the real
value of the money government owes or has obligated itself to pay in the future.
shrinking the real value of private savings held as money.
incentivising consumers to spend money quickly by making money less valuable (in terms of quantities of
goods and services) in the future.
all of the above !!!!!!!
Deflation ------------ Correct Answer ------------- reduces the ability to pay debts and raises the value of
money.
During recessions, the unemployment rate ___________ and output ___________. ---------- Correct
Answer ------------ rises; falls
Classical economists argue that: ---------- Correct Answer ------------ government policies will be
ineffective and counterproductive.
Keynes was motivated to create a macroeconomic theory different from classical theory because: ----------
Correct Answer ------------ Classical theory was inconsistent with the Great Depression.
If there are 200,000 working-age people, the labour force has 160,000 people and 152,000 have jobs,
compute the unemployment rate ---------- Correct Answer ------------ 5%
unemployment rate = unemployed people/total labour force x 100
,If there are 200,000 working-age people, the labour force has 160,000 people and 152,000 have jobs,
compute the labour force participation rate ---------- Correct Answer ------------ 80%
sum of all workers or actively seeking employment/working age population
160000/200000 = 0.8
= 80%
Now suppose, using the information from the previous problem, that the number of people who have jobs
falls to 99,000 and the labour force falls to 100,000. Then: ---------- Correct Answer ------------ the
unemployment rate declines
According to the 'horizontal' interpretation, the demand curve ---------- Correct Answer ------------ shows
for every price the quantity demanded by the consumers in the market.
In a competitive market, if the price of a good is below the equilibrium price, then ---------- Correct
Answer ------------ suppliers, dissatisfied that they're missing some sales, increase production and price.
While at the supermarket you notice that some day-old bakery products are on sale at a reduced price.
Why might that be? ---------- Correct Answer ------------ The quantity supplied at the original price was
larger than quantity demanded. (surplus)
Refer to Figure 1 above. If price is $6 ---------- Correct Answer ------------ excess supply equals 30 units.
Refer to Figure 1 above. The market is in equilibrium when ---------- Correct Answer ------------ Price =
$4 and Quantity = 30 units.
Refer to Figure 1. Suppose that demand increases such that quantity demanded increases by 30 units at
every price, while all else remains unchanged. The market reaches a new equilibrium at ---------- Correct
Answer ------------ Price = $6 and Quantity = 50 units.
Suppose McDonalds runs a special on Big Macs by reducing price by $1.50. All else constant, we should
expect ---------- Correct Answer ------------ an increase in the quantity demanded of Big Macs.
If when the price of tea increases the demand for sugar decreases, then ---------- Correct Answer -----------
- tea and sugar are complements.
Suppose that you observed an increase in the price of electricity and heard on the news that quantity of
electricity consumed has decreased. Which of the following, on its own, is consistent with this
observation? ---------- Correct Answer ------------ A decrease in electricity supply caused by falling levels
in the lakes from which hydro-electricity is generated.
Many woodburners used to heat homes can also burn coal. A decrease in the wage rates of coal miners
and an increase in the price of wood would cause the price of coal to ---------- Correct Answer ------------
rise or fall depending on the magnitude of the changes, but the quantity of coal traded would rise.
Very high oil prices in 1980 encouraged technological advances in (1) the design of cars to improve fuel
efficiency and (2) exploration and development of new sources of oil. Thus, high prices in the oil market
encouraged implementation of new technologies that resulted in ---------- Correct Answer ------------
demand for oil to decrease and supply to increase.
, If the price of cheese falls by 1% and the quantity demanded increases by 4%, then the price elasticity of
demand (є) for cheese is ---------- Correct Answer ------------ 4.0
If the business managers at Otago University were thinking of increasing student fees in the hope of
raising more revenue from students, which of the following values would it prefer as the price elasticity of
demand for enrolments? ---------- Correct Answer ------------ 0.3
Suppose the price of skateboards increases by 10%. If the price elasticity of demand for skateboards were
0.5, then the quantity of skateboards demanded would fall by ---------- Correct Answer ------------ 5%
Suppose that The Playhouse Theatre is thinking of lowering the price of the tickets it sells to students who
might come to see its plays. It sells 30 tickets per performance at the current price of $17.50. As an
experiment, Playhouse managers lowered the price to $12.50 and sold 50 tickets. ---------- Correct
Answer ------------ 1.5
Continuing on with the situation at The Playhouse Theatre, if the theatre is concerned only about raising
revenue from ticket sales to students, then it should ---------- Correct Answer ------------ lower ticket
prices to $12.50.
Which of the following pairs of goods is most likely to have a cross-price elasticity of demand of -1.2? ---
------- Correct Answer ------------ tennis rackets and tennis balls.
If you think good wine is a luxury but good cheese is a necessity, then your demand for wine will be
____________ than your demand for cheese. ---------- Correct Answer ------------ more elastic
Increases in the excise tax rate on the sale of a packet of cigarettes has been used in the campaign to
reduce the numbers of people who smoke and the amount of smoking per person. Taxes have also risen
on loose tobacco for roll-your-own cigarettes. In general, the price elasticity of demand for packets of
cigarettes is likely to be _______ than that for tobacco products generally. ---------- Correct Answer -------
----- higher than
Refer to the figure above. At P = 3, the point elasticity of demand is ____ which indicates that demand is
_____ at that price. ---------- Correct Answer ------------ 1.5; elastic
The price of coffee rose sharply last month, while the quantity sold remained the same. Each of five
people offers an explanation:
Tommy: demand increased, and supply was perfectly inelastic.
Richie: demand increased, and it (demand) was perfectly inelastic.
Harry: demand increased, and supply decreased at the same time.
Larry: supply decreased, and demand was unit elastic.
Mary: supply decreased, and demand was perfectly inelastic.
Who among these five could possibly be correct? ---------- Correct Answer ------------ Tommy, Harry and
Mary
OPEC countries in the early 1970s were supplying about half of the oil produced in the world. They
discovered from the Arab oil embargo that a modest reduction in their output could double the price of
oil. This initial price increase resulted from the combination of ---------- Correct Answer ------------ highly
inelastic demand and highly inelastic supply from the rest of the world (non-OPEC suppliers).
Better weather improves farmland productivity (crop production per hectare), all else the same. So, not
Material with All Questions from Actual Past Exam and
Correct Answer
According to the graph shown in the lecture slides, over the last several decades NZ's merchandise terms
of trade index has generally trended ---------- Correct Answer ------------ upward, meaning that NZ's
ability to purchase imports has generally increased.
In our analysis of a market economy, a market ---------- Correct Answer ------------ consists of all of the
people, i.e., potential buyers and sellers, whose interactions determine the market price.
As the economy enters a boom we can generally expect that : ---------- Correct Answer ------------
inflation will increase and the unemployment rate will decrease.
Now suppose, using the information from the previous problem, that the number of people who have jobs
falls to 99,000 and the labour force falls to 100,000. Then: ------------ Correct Answer ------------- the
unemployment rate declines
Which of the following best illustrates the medium of exchange function of money? ------------ Correct
Answer ------------- You pay for your tall latte using currency
The inflation tax taxes holders of money by: ------------ Correct Answer ------------- shrinking the real
value of the money government owes or has obligated itself to pay in the future.
shrinking the real value of private savings held as money.
incentivising consumers to spend money quickly by making money less valuable (in terms of quantities of
goods and services) in the future.
all of the above !!!!!!!
Deflation ------------ Correct Answer ------------- reduces the ability to pay debts and raises the value of
money.
During recessions, the unemployment rate ___________ and output ___________. ---------- Correct
Answer ------------ rises; falls
Classical economists argue that: ---------- Correct Answer ------------ government policies will be
ineffective and counterproductive.
Keynes was motivated to create a macroeconomic theory different from classical theory because: ----------
Correct Answer ------------ Classical theory was inconsistent with the Great Depression.
If there are 200,000 working-age people, the labour force has 160,000 people and 152,000 have jobs,
compute the unemployment rate ---------- Correct Answer ------------ 5%
unemployment rate = unemployed people/total labour force x 100
,If there are 200,000 working-age people, the labour force has 160,000 people and 152,000 have jobs,
compute the labour force participation rate ---------- Correct Answer ------------ 80%
sum of all workers or actively seeking employment/working age population
160000/200000 = 0.8
= 80%
Now suppose, using the information from the previous problem, that the number of people who have jobs
falls to 99,000 and the labour force falls to 100,000. Then: ---------- Correct Answer ------------ the
unemployment rate declines
According to the 'horizontal' interpretation, the demand curve ---------- Correct Answer ------------ shows
for every price the quantity demanded by the consumers in the market.
In a competitive market, if the price of a good is below the equilibrium price, then ---------- Correct
Answer ------------ suppliers, dissatisfied that they're missing some sales, increase production and price.
While at the supermarket you notice that some day-old bakery products are on sale at a reduced price.
Why might that be? ---------- Correct Answer ------------ The quantity supplied at the original price was
larger than quantity demanded. (surplus)
Refer to Figure 1 above. If price is $6 ---------- Correct Answer ------------ excess supply equals 30 units.
Refer to Figure 1 above. The market is in equilibrium when ---------- Correct Answer ------------ Price =
$4 and Quantity = 30 units.
Refer to Figure 1. Suppose that demand increases such that quantity demanded increases by 30 units at
every price, while all else remains unchanged. The market reaches a new equilibrium at ---------- Correct
Answer ------------ Price = $6 and Quantity = 50 units.
Suppose McDonalds runs a special on Big Macs by reducing price by $1.50. All else constant, we should
expect ---------- Correct Answer ------------ an increase in the quantity demanded of Big Macs.
If when the price of tea increases the demand for sugar decreases, then ---------- Correct Answer -----------
- tea and sugar are complements.
Suppose that you observed an increase in the price of electricity and heard on the news that quantity of
electricity consumed has decreased. Which of the following, on its own, is consistent with this
observation? ---------- Correct Answer ------------ A decrease in electricity supply caused by falling levels
in the lakes from which hydro-electricity is generated.
Many woodburners used to heat homes can also burn coal. A decrease in the wage rates of coal miners
and an increase in the price of wood would cause the price of coal to ---------- Correct Answer ------------
rise or fall depending on the magnitude of the changes, but the quantity of coal traded would rise.
Very high oil prices in 1980 encouraged technological advances in (1) the design of cars to improve fuel
efficiency and (2) exploration and development of new sources of oil. Thus, high prices in the oil market
encouraged implementation of new technologies that resulted in ---------- Correct Answer ------------
demand for oil to decrease and supply to increase.
, If the price of cheese falls by 1% and the quantity demanded increases by 4%, then the price elasticity of
demand (є) for cheese is ---------- Correct Answer ------------ 4.0
If the business managers at Otago University were thinking of increasing student fees in the hope of
raising more revenue from students, which of the following values would it prefer as the price elasticity of
demand for enrolments? ---------- Correct Answer ------------ 0.3
Suppose the price of skateboards increases by 10%. If the price elasticity of demand for skateboards were
0.5, then the quantity of skateboards demanded would fall by ---------- Correct Answer ------------ 5%
Suppose that The Playhouse Theatre is thinking of lowering the price of the tickets it sells to students who
might come to see its plays. It sells 30 tickets per performance at the current price of $17.50. As an
experiment, Playhouse managers lowered the price to $12.50 and sold 50 tickets. ---------- Correct
Answer ------------ 1.5
Continuing on with the situation at The Playhouse Theatre, if the theatre is concerned only about raising
revenue from ticket sales to students, then it should ---------- Correct Answer ------------ lower ticket
prices to $12.50.
Which of the following pairs of goods is most likely to have a cross-price elasticity of demand of -1.2? ---
------- Correct Answer ------------ tennis rackets and tennis balls.
If you think good wine is a luxury but good cheese is a necessity, then your demand for wine will be
____________ than your demand for cheese. ---------- Correct Answer ------------ more elastic
Increases in the excise tax rate on the sale of a packet of cigarettes has been used in the campaign to
reduce the numbers of people who smoke and the amount of smoking per person. Taxes have also risen
on loose tobacco for roll-your-own cigarettes. In general, the price elasticity of demand for packets of
cigarettes is likely to be _______ than that for tobacco products generally. ---------- Correct Answer -------
----- higher than
Refer to the figure above. At P = 3, the point elasticity of demand is ____ which indicates that demand is
_____ at that price. ---------- Correct Answer ------------ 1.5; elastic
The price of coffee rose sharply last month, while the quantity sold remained the same. Each of five
people offers an explanation:
Tommy: demand increased, and supply was perfectly inelastic.
Richie: demand increased, and it (demand) was perfectly inelastic.
Harry: demand increased, and supply decreased at the same time.
Larry: supply decreased, and demand was unit elastic.
Mary: supply decreased, and demand was perfectly inelastic.
Who among these five could possibly be correct? ---------- Correct Answer ------------ Tommy, Harry and
Mary
OPEC countries in the early 1970s were supplying about half of the oil produced in the world. They
discovered from the Arab oil embargo that a modest reduction in their output could double the price of
oil. This initial price increase resulted from the combination of ---------- Correct Answer ------------ highly
inelastic demand and highly inelastic supply from the rest of the world (non-OPEC suppliers).
Better weather improves farmland productivity (crop production per hectare), all else the same. So, not
