Eco 007 1 exam - BS ACCOUNTANCCY PDF

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Name:Section: Schedule:Permitnumber:DATE: AUG,FIRST PERIODICAL EXAMINATIONDirection: Shade the letter of your answer on the separate answer sheet provided. You can use black ink marker or ball pen. Erasure means wrong. Cheating is strictly prohibited.A 1. With respect to consumption, investment, gov...

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ECO 007: Economic Development

Name: Section:

Permitnumber: DATE: AUG.31,2021

Schedule: FIRST PERIODICAL EXAMINATION

Direction: Shade the letter of your answer on the separate answer sheet provided. You can use black ink marker or ball pen. Erasure means wrong. Cheating is strictly prohibited. A 1. With respect to consumption, investment, government purchases and net exports, the national income accounts measure a. actual expenditures in each of the categories. b. desired expenditures in each of the categories. c. both actual and desired expenditures, since actual expenditure must equal desired expenditure in each category. d. neither actual nor desired expenditures. D 2. Undesired inventory accumulation occurs when a. consumption exceeds investment. b. investment exceeds consumption. c. desired expenditure exceeds actual expenditure. d. actual expenditure exceeds desired expenditure. D 3. The consumption function in the basic model of national income determination is known as the a. life-cycle theory. c. Friedman consumption function. b. permanent-income theory. d. Keynesian consumption function. B 4. "The marginal propensity to consume" refers to the additional a. saving that occurs out of an additional dollar of income. b. consumption that occurs out of an additional dollar of income. c. consumption that occurs out of an additional dollar of investment. d. consumption caused by a change in tastes. D 5. Increased wealth a. causes no change in consumption because consumption is a function of disposable income only. b. causes no change in consumption because the increase is always expected. c. causes a downward shift in the consumption function. d. causes an upward shift in the consumption function. A 6. Investment expenditure is the _____ volatile component of GDP, and changes in investment are _____ associated with the business cycle. a. most; strongly c. least; strongly b. most; weakly d. least; weakly B 7. Point out the monetary policy instrument: a. An increase in direct taxes c. Freezing pensions 1

ECO 007: Economic Development

Name: Section:

Permitnumber: DATE: AUG.31,2021

Schedule:

b. Open-market operations

d. A cut in government purchase of goods and services

B 8. To increase the money supply, the bank central could: a. Cut taxes b. Purchase bonds in the open-market c. Encourage people to held more cash (currency in circulation) d. Increase the government spending C 9. A cut in direct taxes on households’ income1 a. Has no effect b. Shifts the aggregate demand curve to the left c. Shifts the aggregate demand curve to the right e. Moves the economy along the aggregate demand curve D 10. An increase in the money supply and a drop in consumer confidence will lead to a. A decrease in output with an ambiguous effect on the interest rate. b. An increase in output and a decrease in the interest rate. c. A decrease in output and an increase in the interest rate. d. An ambiguous effect on output and a decrease in the interest rate. B 11. Economists point out that scarcity confronts a. the rich but not the poor. c. the poor but not the rich. b. both the poor and the rich. d. neither the poor nor the rich. B 12. Entrepreneurs do all of the following EXCEPT a. bear risk from business decisions. b. own all the other resources. c. come up with new ideas about what, how, when and where to produce. d. organize labor, land, and capital. C 13. The term used to emphasize that making choices in the face of scarcity involves a cost is a. utility cost. c. opportunity cost. b. accounting cost. d. substitution cost. B 14. An increase in the CPI from 200 to 225 would indicate an annual rate of measured inflation of a. 1.3% b. 12.5% c. 25% d. 200% D 15. Inflation benefits people who a. lend at fixed interest rates. b. save at fixed interest rates.

c. receive fixed incomes. d. borrow at fixed interest rates

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ECO 007: Economic Development

Name: Section:

Schedule:

Permitnumber: DATE: AUG.31,2021

D 16. The price index for the current year is 180. This means that, on average, prices in the current year are a. $0.80 higher than prices in the base year. c. $1.80 higher than prices in the base year. b. 80 percent of prices in the base year. d. 80% higher than base year prices D 17. The consumer price index a. measures the cost of an unchanging basket of goods and services. b. does not take into account relative price changes and, therefore, is biased. c. does not completely account for quality changes and, therefore, is biased. d. All of the above. D 18. Which one of the following groups is most hurt by unanticipated inflation? a. workers with cost-of-living adjustment clauses in their labor contracts b. Social Security recipients c. workers who sign new work agreements every day d. wealthy people who hold much cash in their wall safes C 19. Because there is always frictional unemployment, “full” employment is considered to exist if a. every man, woman, and child is working. c. the unemployment rate is relatively small. b. everyone age 16 and over is working. d. the unemployment rate is 12 percent. A 20. Unemployment that results from search time required to find new employment after leaving a previous position is known as a. frictional unemployment. c. seasonal unemployment b. structural unemployment. d. cyclical unemployment. C 21. Which one of the following is least like the others? a. frictional unemployment c. discouraged worker unemployment b. seasonal unemployment d. cyclical unemployment D 22. If stay-at-home dads were counted in the labor force and considered employed, then a. the male labor force participation rate would rise. b. the overall official unemployment rate would fall. c. overall official employment would rise. d. All of the above. B 23. If the average duration of unemployment rises, other things being constant, a. the participation rate will rise. c. total employment must fall. b. the unemployment rate will rise. d. total unemployment must fall A 24. Countries with the highest inflation rates are likely to have a. the highest rates of money growth. c. the lowest interest rates. 3

ECO 007: Economic Development

Name: Section:

Permitnumber: DATE: AUG.31,2021

Schedule:

b. large budget deficits.

d. both (a) and (b) of the above.

B 25. A one-time increase in the price level a. is rarely reported by the news media as inflation, but is nevertheless considered to be inflation by economists. b. is regularly reported by the news media as inflation, but is not considered to be inflation by economists. c. is rarely reported by the news media as inflation because it is not considered to be inflation by economists. d. is regularly reported by the news media as inflation because it is considered to be inflation by economists. D 26. Factors other than money growth that can generate an inflation in monetarist analysis include: a. an increase in government spending. c. an increase in net exports. b. a tax reduction. d. none of the above. D 27. Which of the following is not an approach in measuring Gross Domestic Product (GDP) of a country? a. Expenditure Approach c. Output Approach b. Income Approach d. Input Approach C 28. According to the monetarists, inflation is caused by a. supply shocks. c. expansionary monetary policies. b. expansionary fiscal policies. d. government regulations. A 29. Complete Milton Friedman’s famous proposition: “Inflation is always and everywhere a _____ phenomenon.” a. monetary c. policy b. political d. budgetary A 30. At first cut, the simple solution to fighting inflation is a. reducing the growth rate of the money supply. b. limiting the number of terms that politicians can serve in elective office. c. returning the economy to barter by prohibiting the use of fiat money. d. to impose price controls on businesses that attempt to raise prices. C 31. The monetarists’ proposition that inflation is always and everywhere a monetary phenomenon holds only if a. government budget deficits do not rise continually. b. the unemployment rate does not rise continually. c. the price level rises continually. d. the United States does not experience more than one negative supply shock per decade. 4

ECO 007: Economic Development

Name: Section:

Schedule:

Permitnumber: DATE: AUG.31,2021

B 32. GDP can be defined in different ways. Which sentence is correct? a. GDP is the value of final and intermediate goods produced in the economy during a given period. b. GDP is the sum of labor income, capital income and indirect taxes during a given period. c. The production side definition of GDP is equivalent to the income side one if and only if we are assuming that the firms do not hold inventories. d. GDP is equivalent to the population wealth. C33. In the goods market model with a marginal propensity to consume of .75, a decrease in taxes (T) by 100 billion causes an increase in output by: a. 100 billion c. 300 billion b. 200 billion d. 400 billion

C 34. The money multiplier a. May be equal to 1 if and only if people decide not to deposit their money in banks. b. May be equal to 1 if and only if banks put in reserves all the deposits they get. c. May be equal to 1 if and only if people decide to have all their money in currency or banks don’t lend or buy bonds with the deposits they get. d. Must always be greater than 1. A OR C 35. GDP, or Gross Domestic Product, is (most precisely) defined as a. value of all final goods and services produced for the marketplace over a period of time within domestic borders b. value of all final goods and services produced for the marketplace over a period of time by the citizens of that country c. value of all final goods and services produced within the country within one year d. the sum of the value-added produced over a period of time within the country A 36. The production output of Coca-Cola’s company in China is part of ____. The profits of the company which are repatriated to the US on the other hand are part of US ____ but not US ____ a. China’s GDP; GNP; GDP c. US GDP; GNP; GDP b. China’s GDP; GDP; GNP d. US GNP; GNP; GDP C.. 37. Uncertainty about the future is likely to ____ spending and increasing wealth is likely to ____ spending. a. increase, decrease c. increase, increase b. decrease, increase d. decrease, decrease A 38. An equal increase in government spending and taxes will cause: a. an increase in output c. an uncertain effect on output b. no change in output d. a decrease in output 5

ECO 007: Economic Development

Name: Section:

Schedule:

Permitnumber: DATE: AUG.31,2021

B.. 39. Who of the following people would be in favor of inflation? a. students with a student loan b. the employee of a local shop who receives a non-adjusted salary c. creditors d. your grandmother who keeps money under her mattress A 40. John, a car mechanic from Detroit is out of a job since he his company has been transplanted to China. Since then he has been frantically looking for a job, going to the agencies every single day. John is part of the ____ . a. cyclical unemployment figures c. structural unemployment figures b. frictional unemployment figures d. discouraged workers figures

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