ECO 305 MIDTERM EXAM WITH COMPLETE SOLUTIONS
100% VERIFIED!!
-Recessions are periods of
*rising incomes.
*rising prices.
*falling prices.
*falling incomes. - ANSWER falling incomes.
-The unemployment rate measures the fraction of the
*labor force that has stopped looking for work.
*adult population that is not working.
*labor force that is not working.
*adult population that has stopped looking for work. - ANSWER labor force that is not
working.
-In U.S. history, deflation
*has never occurred.
*is rare now but has occurred at times in the past.
*is the norm.
*is about as common as inflation. - ANSWER is rare now but has occurred at times in
the past.
-Consider all of the statements below and select those that explain why economists use
models to analyze the economy.
Economists use models because they
*are fun.
,*clarify our thinking.
*show how exogenous variables influence endogenous variables. - ANSWER *are fun.
*clarify our thinking.
*show how exogenous variables influence endogenous variables.
Complete the following statement correctly.
Market-clearing models assume that prices are _________ and are best applied to
understand the economy in the _________. - ANSWER flexible, long run
-Microeconomics is
*a separate field unrelated to macroeconomics.
*a misspelling of the word macroeconomics.
*the study of how macroeconomic data are constructed from individual observations.
*useful for understanding the decisions behind macroeconomic relationships. -
ANSWER useful for understanding the decisions behind macroeconomic relationships.
Please complete the following statement.
__________ measures the value of the economy's output at current prices and is a
__________. - ANSWER Nominal GDP, flow variable
-The largest component of GDP is
*consumption.
*government purchases.
*net exports.
*investment. - ANSWER consumption.
The Ford Motor Company makes a car in 2020 and sells it to the Jones family in 2021.
Use this information to complete the statement below.
, This event increases consumption in _______ and increases GDP in ________ - ANSWER
2021, 2020
-If nominal GDP and real GDP both rise by 10 percent, then the GDP deflator
*also rises by 10 percent.
*remains unchanged.
*falls by 10 percent.
*rises by about 20 percent. - ANSWER *remains unchanged.
-Which of the following events would affect the CPI but not the GDP deflator?
*Kellogg's, the American cereal maker, cuts the price of a box of corn flakes.
*Barbers around the country raise the prices they charge for haircuts.
*Boeing, the American airplane manufacturer, raises the price it charges the U.S. Air
Force for fighter jets.
*Volvo, the Swedish auto maker, raises the prices of the cars it sells in the United
States. - ANSWER *Volvo, the Swedish auto maker, raises the prices of the cars it sells
in the United States.
-Assume a person quits his job to become at a stay-at-home parent. Please complete the
statement below.
*The labor-force participation rate _______, and the unemployment rate ______. -
ANSWER falls, rises
-GDP is all of the following except:
*the total output of the economy.
*the total income of everyone in the economy.
*the total expenditure of everyone in the economy.
*the overall expenditure on the economy's output of goods and services. - ANSWER
*the total expenditure of everyone in the economy.
100% VERIFIED!!
-Recessions are periods of
*rising incomes.
*rising prices.
*falling prices.
*falling incomes. - ANSWER falling incomes.
-The unemployment rate measures the fraction of the
*labor force that has stopped looking for work.
*adult population that is not working.
*labor force that is not working.
*adult population that has stopped looking for work. - ANSWER labor force that is not
working.
-In U.S. history, deflation
*has never occurred.
*is rare now but has occurred at times in the past.
*is the norm.
*is about as common as inflation. - ANSWER is rare now but has occurred at times in
the past.
-Consider all of the statements below and select those that explain why economists use
models to analyze the economy.
Economists use models because they
*are fun.
,*clarify our thinking.
*show how exogenous variables influence endogenous variables. - ANSWER *are fun.
*clarify our thinking.
*show how exogenous variables influence endogenous variables.
Complete the following statement correctly.
Market-clearing models assume that prices are _________ and are best applied to
understand the economy in the _________. - ANSWER flexible, long run
-Microeconomics is
*a separate field unrelated to macroeconomics.
*a misspelling of the word macroeconomics.
*the study of how macroeconomic data are constructed from individual observations.
*useful for understanding the decisions behind macroeconomic relationships. -
ANSWER useful for understanding the decisions behind macroeconomic relationships.
Please complete the following statement.
__________ measures the value of the economy's output at current prices and is a
__________. - ANSWER Nominal GDP, flow variable
-The largest component of GDP is
*consumption.
*government purchases.
*net exports.
*investment. - ANSWER consumption.
The Ford Motor Company makes a car in 2020 and sells it to the Jones family in 2021.
Use this information to complete the statement below.
, This event increases consumption in _______ and increases GDP in ________ - ANSWER
2021, 2020
-If nominal GDP and real GDP both rise by 10 percent, then the GDP deflator
*also rises by 10 percent.
*remains unchanged.
*falls by 10 percent.
*rises by about 20 percent. - ANSWER *remains unchanged.
-Which of the following events would affect the CPI but not the GDP deflator?
*Kellogg's, the American cereal maker, cuts the price of a box of corn flakes.
*Barbers around the country raise the prices they charge for haircuts.
*Boeing, the American airplane manufacturer, raises the price it charges the U.S. Air
Force for fighter jets.
*Volvo, the Swedish auto maker, raises the prices of the cars it sells in the United
States. - ANSWER *Volvo, the Swedish auto maker, raises the prices of the cars it sells
in the United States.
-Assume a person quits his job to become at a stay-at-home parent. Please complete the
statement below.
*The labor-force participation rate _______, and the unemployment rate ______. -
ANSWER falls, rises
-GDP is all of the following except:
*the total output of the economy.
*the total income of everyone in the economy.
*the total expenditure of everyone in the economy.
*the overall expenditure on the economy's output of goods and services. - ANSWER
*the total expenditure of everyone in the economy.
