This pack of ECO 212 Final Exam consists of:

ECO 212 ECO212 Final Exam A

1)Economics does not study correct or incorrect behaviors, but rather it assumes that economic agents make the best decisions given their knowledge of the costs and benefits. What term best describes this behavior?

2) By definition, what is economics the study of?

3) What is the term in economics by which a group of buyers and sellers of a product come together to trade?

4) Which of the following statements describes the actions of producers in the circular flow model?

5) If a commercial dairy farm wants to raise funds to purchase feeding troughs, in which market does it do so?

6) Which of the following is not a critical function of the government in facilitating the operation of a market economy?

7) If demand is inelastic, the absolute value of the price elasticity of demand is

8) Economists in general

9) A demand curve which is ________ represents perfectly inelastic demand, and a demand curve which is ________ represents inelastic demand.

10) A decrease in the price of GPS systems will result in

11) At a product’s equilibrium price

12) If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until

13) Marginal revenue product of labor for a competitive seller is

14) Let MP = marginal product, P = output price, and W = wage, then the equation that represents the condition where a competitive firm would hire another worker is

15) Marginal revenue product for a perfectly competitive seller is equal to

16) An individual’s labor supply curve shows

17) A firm’s demand for labor curve is also called its

18) A decrease in the wage rate causes

19) Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption?

20) Which of the following is an example of a quasi-public good?

21) Which of the following displays these two characteristics: rivalry and nonexcludability?

22) A monopoly is a seller of a product

23) The labor supply for an industry would decrease if

24) A characteristic found only in oligopolies is

25) The Philippines and Vietnam have roughly the same size population. Suppose the GDP of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion. You should conclude

26) Gross domestic product understates the total production of final goods and services because of the omission of

27) Gross domestic product is calculated by summing up

28) Fiscal policy refers to changes in

29) If the economy is slipping into a recession, which of the following would be an appropriate fiscal policy?

30) Which of the following is an objective of fiscal policy?

31) Which of the following assets is most liquid?

32) If credit card balances rise in the economy, then M1 will ________ and M2 will ________.

33) Economists estimate that ________ of U.S. currency is outside the United States and held primarily by ________.

34) The M2 measure of the money supply equals

35) The M1 measure of the money supply equals

36) Which of the following is one of the most important benefits of money in an economy?

37) Open market operations refer to the purchase or sale of ________ to control the money supply.

38) Which of the following determines the amount of money the banking system as a whole can create?

39) Money market mutual funds sell shares to investors and use the money to buy

40) The goals of monetary policy tend to be interrelated. For example, when the Fed pursues the goal of ________, it also can achieve the goal of ________ simultaneously.

41) The Federal Reserve System’s four monetary policy goals are

42) The Federal Reserve’s two main ________ are the money supply and the interest rate.

43) Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except

44) Table 2-3 Serena Haley Bracelets 8 9 Necklaces 16 12 Refer to Table 2-3. Which of the following statements is true?

45) Table 2-3 Serena Haley Bracelets 8 9 Necklaces 16 12 Refer to Table 2-3. What is Haley’s opportunity cost of making a bracelet?

46) How does an increase in a country’s exchange rate affect its balance of trade?

47) For each bottle of wine that Italy produces, it gives up the opportunity to make 10 pounds of cheese. France can produce 1 bottle of wine for every 25 pounds of cheese it produces. Which of the following is true about the comparative advantage between the two countries?

48) When the market value of the dollar rises relative to other currencies around the world, we say that

49) If the dollar appreciates against the Mexican peso,

50) If the purchasing power of the dollar is greater than the purchasing power of the euro, purchasing power parity predicts that the exchange rate will

51) If interest rates in the United States rise

52) The three most important international financial centers today are

53) China has been accused of deliberately undervaluing its currency, the yuan, in order to

54) What two countries each accounted for more than 25% of all foreign purchases of U.S. stocks and bonds in 2008?

ECO 212 ECO212 Final Exam B

1) Economics does not study correct or incorrect behaviors, but rather it assumes that economic agents make the best decisions given their knowledge of the costs and benefits. What term best describes this behavior?

2) What is the term in economics by which a group of buyers and sellers of a product come together to trade?

3) Why do consumers have to make tradeoffs in deciding what to consume?

4) What might you call an outward shift of a nation’s production possibilities frontier?

5) Which of the following is not a critical function of the government in facilitating the operation of a market economy?

6) Which of the following is an example of spending on goods and services in the circular flow model?

7) A demand curve which is ________ represents perfectly inelastic demand, and a demand curve which is ________ represents inelastic demand.

8) Suppose the value of the price elasticity of demand is -3. What does this mean?

9) Price elasticity of demand measures

10) Danielle Ocean pays for monthly pool maintenance for her home swimming pool. Last week the owner of the pool service informed Danielle that he will have to raise his monthly service fee because of increases in the price of pool chemicals. How is the market for pool maintenance services affected by this?

11) At a product’s equilibrium price

12) Which of the following is the correct way to describe equilibrium in a market?

13) Let MP = marginal product, P = output price, and W = wage, then the equation that represents the condition where a competitive firm would hire another worker is

14) Marginal revenue product of labor for a competitive seller is

15) Firms use information on labor’s marginal revenue product to determine

16) A decrease in the wage rate causes

17) How will an increase in population affect the labor market?

18) An individual’s labor supply curve shows

19) Private costs

20) Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption?

21) Which of the following is an example of a common resource?

22) The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because

23) A characteristic found only in oligopolies is

24) A monopoly is a seller of a product

25) Gross domestic product is calculated by summing up

26) Which of the following goods is directly counted in GDP?

27) The Philippines and Vietnam have roughly the same size population. Suppose the GDP of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion.

You should conclude

28) If the economy is slipping into a recession, which of the following would be an appropriate fiscal policy?

29) Which of the following is an objective of fiscal policy?

30) Fiscal policy refers to changes in

31) In economics, money is defined as

32) Dollar bills in the modern economy serve as money because

33) If credit card balances rise in the economy, then M1 will ________ and M2 will ________.

34) Dollar bills in the modern economy serve as money because

35) Which of the following functions of money would be violated if inflation were high?

36) In an economy with ________, there are more prices than in an economy with ________.

37) If the central bank can act as a lender of last resort during a banking panic, banks can

38) Which of the following determines the amount of money the banking system as a whole can create?

39) To offset the effect of households and firms deciding to hold less of their money in checking account deposits and more in currency, the Federal Reserve could

40) If the probability of losing your job remains ________, a recession would be a good time to purchase a home because the Fed usually ________ interest rates during this time.

41) Toll Brothers, a residential home builder, did well during the recession in 2001 but did not do so well in 2007 after the housing bubble burst. The reason for this is

42) The goals of monetary policy tend to be interrelated. For example, when the Fed pursues the goal of ________, it also can achieve the goal of ________ simultaneously.

43) Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except

44) Table 2-3

Refer to Table 2-3. What is Haley’s opportunity cost of making a bracelet?

45) For each bottle of wine that Italy produces, it gives up the opportunity to make 10 pounds of cheese. France can produce 1 bottle of wine for every 25 pounds of cheese it produces. Which of the following is true about the comparative advantage between the two countries?

46) How does an increase in a country’s exchange rate affect its balance of trade?

47) If there is currently a surplus of dollars, which of the following would you expect to see in the foreign exchange market?

48) If the dollar appreciates against the Mexican peso,

49) If relative purchasing power between the United States and Argentina is 3.22 pesos per dollar, under which circumstances would we say that the dollar is “overvalued”?

50) If the purchasing power of the dollar is greater than the purchasing power of the euro, purchasing power parity predicts that the exchange rate will

51) You decide to work in Japan for the next 10 years, accumulate some savings, then move back to the United States and convert your savings from yen to dollars. At the time of your move, economists predict that consumers in the United States have reignited their love of Japanese products, especially hybrid cars, and expect that this strong preference for Japanese products will continue for the next decade. How should this influence your decision to work and save in Japan?

52) If interest rates in the United States rise,

53) China has been accused of deliberately undervaluing its currency, the yuan, in order to

54) What two countries each accounted for more than 25% of all foreign purchases of U.S. stocks and bonds in 2008?

ECO 212 ECO212 Final Exam C

1) The decision of which assumptions to make is

2) Economic models

3) When studying the effects of public policy changes, economists

4) A competitive market is a market in which

5) In a market economy,

6) Which of the following statements is correct?

7) If a decrease in income increases the demand for a good, then the good is

8) A likely example of substitute goods for most people would be

9) Economists in general

10) A decrease in input costs to firms in a market will result in

11) Another term for equilibrium price is

12) The unique point at which the supply and demand curves intersect is called

13) The marginal product of labor is equal to the

14) When a firm’s only variable input is labor, then the slope of the production function measures the

15) On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

16) A Luddite would be expected to fear

17) The term Luddite is used to describe

18) Suppose that a new invention decreases the marginal productivity of labor, shifting labor demand to the left. Such an invention would be an example of

20) The typical firm in the U. S. economy

21) In which of the following markets is economic profit driven to zero in the long run?

22) A firm in a monopolistically competitive market is similar to a monopolist in the sense that it

23) The U.S. market for locomotives is divided between two producers: General Electric has 70 percent of the market and General Motors has 30 percent. This market is an example of

24) The commercial jetliner industry, consisting of Boeing and Airbus, would best be described as a (an)

25) For an economy as a whole

26) Which of the following newspaper headlines would be more closely related to what microeconomists study than to what macroeconomists study?

27) Gross domestic product serves as a measure of two things:

28) Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift

29) When production costs rise,

30) Stagflation exists when prices

31) One determinant of the long-run average unemployment rate is the

32) Closely watched indicators such as the inflation rate and unemployment are released each month by the

33) If policymakers increase aggregate demand, the price level

34) Which of the following statements about U.S. inflation is NOT correct

35. Economists all agree that

36. Which of the following concerning the history of U.S. inflation is NOT correct?

37. Nominal GDP measures

38) Economic variables whose values are measured in monetary units are called

39) According to the classical dichotomy, which of the following is influenced by monetary factors?

40) According to the classical dichotomy, which of the following is NOT influenced by monetary factors?

41) Changes in nominal variables are determined mostly by the quantity of money and the monetary system according to

42) According to the classical dichotomy, when the money supply doubles, which of the following also double?

43) For any country, if the world price of computers is higher than the domestic price of computers without trade, that country should

44) The price of a good that prevails in a world market is called the

45) The price of cotton that prevails in international markets is called the

46) Outflow represents the quantity of dollars

47) The open-economy macroeconomic model includes

48) The open-economy macroeconomic model examines the determination of

49) The before-trade price of fish in Greece is $3.00 per pound. The world price of fish is $5.00 per pound. Greece is a price-taker in the fish market. If Greece begins to allow trade in fish, its consumers of fish will become

50) The before-trade price of fish in Greece is $3.00 per pound. The world price of fish is $5.00 per pound. Greece is a price-taker in the fish market. If Greece allows trade in fish, then Greece will become an

51) With which of the Ten Principles of Economics is the study of international trade most closely connected?

52) Which of the following statements is true?

53) Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. Which groups in Aquilonia are better off as a result of the new free-trade policy?

54) Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. We can conclude that producer surplus in Aquilonia is now