ECON 102 Final Exam
Name:
Student ID:
Exam Rules
1. The exam starts at 3:00 and ends at 6:00.
2. There are 20 multiple choice questions worth 3 points each, 5 short answer questions
worth 9 points each, and 3 analytical questions worth 25 points each (total 180 points).
3. Make sure to fill in the scantron for multiple choice questions. You will not be given
extra time at the end.
4. Calculators (including graphing calculators) are allowed. If you do not have a calcula-
tor, you can leave your answer as a fraction.
5. Please put all materials other than your calculator and a pen or pencil in your bag. If
you have a phone or other item out for any reason you will be given a 0 on the exam.
6. If you have a question or need to go to the bathroom raise your hand.
7. All answers should be written directly on your exam
8. On the long questions you must SHOW ALL WORK. No credit will be given for an
answer with no work.
1
,Multiple Choice (2 points each)
1. Consumers buy 100 iPhones (produced in the US) for $500 each and 50 Samsung
Galaxies (produced in Korea) for $500 each. If these are the only transactions, GDP
in the United States is
(a) $0
(b) $25,000
(c) $50,000
(d) $75,000
2. A United States car manufacturer sells a car in the US in 2019 for $20,000. The tires
for the car were produced by another firm in the US in 2018 and sold out of their
inventory for $2000 total. The frame of the car was purchased from Japan for $4000.
The remaining labor and supplies necessary to build the car all came from the US in
2019 and cost $10,000. As a result of the car being built, US GDP in 2019 increased
by
(a) $10,000
(b) $14,000
(c) $16,000
(d) $20,000
3. The government budget deficit is a and the government debt is a
(a) stock...stock
(b) flow...stock
(c) stock...flow
(d) flow...flow
4. A consumer has utility over consumption and leisure given by U (c, l) = 2c − (24 − l) 2
where l is measured as a percentage of time spent in leisure and the rest spent on
labor. If consumer spends half their time on leisure l = 12 and the real wage is 0.75,
to increase utility, the consumer should
(a) Work more
(b) Work less
(c) They are already at the optimal point
(d) Not enough information
2
, 5. The government is considering two tax schemes. One charges the same tax to all con-
sumers regardless of how much they work (lump sum tax). The second is proportional
to their wage (income tax). The government wants the same revenue with either tax.
Relative to the lump sum tax, the income tax will cause (you can assume labor supply
is upward sloping in wages)
(a) Less total output
(b) More total output
(c) Output is the same under either tax
(d) Output could be higher or lower
6. Two economies are exactly the same in every aspect except for the investment function.
Economy A has investment function given by I A = 10, 000 − 10r. Economy B has
investment function I B = 10, 000−100r. Based on the IS-LM model, in which economy
will government spending have a larger increase on output
(a) Economy A
(b) Economy B
(c) Same effect
(d) We cannot tell from the information given
7. In a liquidity trap, which of the following is true?
(a) Fiscal policy is more effective, but monetary policy is less effective than usual
(b) Monetary Policy is more effective, but fiscal policy is less effective than usual
(c) Neither fiscal nor monetary policy is as effective as usual
(d) Both fiscal and monetary policy are more effective than usual
8. In the United States today, the unemployment rate is approximately
(a) 1.3%
(b) 3.6%
(c) 8.2%
(d) 13.8%
9. The same hamburger costs $10 in the US and 1000 Yen in Japan. A US citizen sells a
hamburger for dollars in the United States, exchanges the dollars for yen, and buys 2
hamburgers in Japan. What is the nominal exchange rate (in Yen/Dollar)?
(a) 1/2
(b) 2
(c) 1/200
(d) 200
3
Name:
Student ID:
Exam Rules
1. The exam starts at 3:00 and ends at 6:00.
2. There are 20 multiple choice questions worth 3 points each, 5 short answer questions
worth 9 points each, and 3 analytical questions worth 25 points each (total 180 points).
3. Make sure to fill in the scantron for multiple choice questions. You will not be given
extra time at the end.
4. Calculators (including graphing calculators) are allowed. If you do not have a calcula-
tor, you can leave your answer as a fraction.
5. Please put all materials other than your calculator and a pen or pencil in your bag. If
you have a phone or other item out for any reason you will be given a 0 on the exam.
6. If you have a question or need to go to the bathroom raise your hand.
7. All answers should be written directly on your exam
8. On the long questions you must SHOW ALL WORK. No credit will be given for an
answer with no work.
1
,Multiple Choice (2 points each)
1. Consumers buy 100 iPhones (produced in the US) for $500 each and 50 Samsung
Galaxies (produced in Korea) for $500 each. If these are the only transactions, GDP
in the United States is
(a) $0
(b) $25,000
(c) $50,000
(d) $75,000
2. A United States car manufacturer sells a car in the US in 2019 for $20,000. The tires
for the car were produced by another firm in the US in 2018 and sold out of their
inventory for $2000 total. The frame of the car was purchased from Japan for $4000.
The remaining labor and supplies necessary to build the car all came from the US in
2019 and cost $10,000. As a result of the car being built, US GDP in 2019 increased
by
(a) $10,000
(b) $14,000
(c) $16,000
(d) $20,000
3. The government budget deficit is a and the government debt is a
(a) stock...stock
(b) flow...stock
(c) stock...flow
(d) flow...flow
4. A consumer has utility over consumption and leisure given by U (c, l) = 2c − (24 − l) 2
where l is measured as a percentage of time spent in leisure and the rest spent on
labor. If consumer spends half their time on leisure l = 12 and the real wage is 0.75,
to increase utility, the consumer should
(a) Work more
(b) Work less
(c) They are already at the optimal point
(d) Not enough information
2
, 5. The government is considering two tax schemes. One charges the same tax to all con-
sumers regardless of how much they work (lump sum tax). The second is proportional
to their wage (income tax). The government wants the same revenue with either tax.
Relative to the lump sum tax, the income tax will cause (you can assume labor supply
is upward sloping in wages)
(a) Less total output
(b) More total output
(c) Output is the same under either tax
(d) Output could be higher or lower
6. Two economies are exactly the same in every aspect except for the investment function.
Economy A has investment function given by I A = 10, 000 − 10r. Economy B has
investment function I B = 10, 000−100r. Based on the IS-LM model, in which economy
will government spending have a larger increase on output
(a) Economy A
(b) Economy B
(c) Same effect
(d) We cannot tell from the information given
7. In a liquidity trap, which of the following is true?
(a) Fiscal policy is more effective, but monetary policy is less effective than usual
(b) Monetary Policy is more effective, but fiscal policy is less effective than usual
(c) Neither fiscal nor monetary policy is as effective as usual
(d) Both fiscal and monetary policy are more effective than usual
8. In the United States today, the unemployment rate is approximately
(a) 1.3%
(b) 3.6%
(c) 8.2%
(d) 13.8%
9. The same hamburger costs $10 in the US and 1000 Yen in Japan. A US citizen sells a
hamburger for dollars in the United States, exchanges the dollars for yen, and buys 2
hamburgers in Japan. What is the nominal exchange rate (in Yen/Dollar)?
(a) 1/2
(b) 2
(c) 1/200
(d) 200
3
