Macro Econ Exam 1

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THE UNIVERSITY OF WESTERN ONTARIO
LONDON
CANADA
Jeannie Gillmore

ECONOMICS 1022B-002/004

February 11, 2012

MIDTERM 1

INSTRUCTIONS:
1. The examination begins at 4:00 p.m. and ends at 6:00 p.m. 2. Check that your examination paper contains 14 pages.
3. Use a BLACK PENCIL to complete your Scantron Form.
Print your NAME and complete your SIGNATURE.
Enter your STUDENT NUMBER.
Enter your SECTION NUMBER, which is either 002 or 004.
4. Please hand in Scantron Form only.
5. You may use a calculator but your cell phone may not be used as a calculator. 6. Your cell phone must be switched off and left in your bag at the front of the exam room. 7. You must remain in the examination room until you have finished the exam. No breaks outside of the examination room will be allowed.

NOTE: QUESTIONS ARE PRINTED ON BOTH SIDES OF EACH PAGE

Economics 1022B - 002/004 Mid-term 1
February 11, 2012
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Which of the following statements is true?
A) Final goods and services produced in Canada by foreigners are part of Canada's GDP. B) Final goods and services produced in Canada by foreigners are exports. C) Final goods and services produced in Canada by foreigners are part of the foreign country's GDP.

D) Final goods and services produced in Canada by foreigners are imports. E) Final goods and services produced abroad by Canadians are part of Canadian GDP. Use the figure below to answer the following question.

Figure 1
2) Refer to Figure 1, which shows the circular flow of expenditure and income for Venus. During 2008, A was $100, B was $50, C was $30 and D was $10. How much is GDP? A) $50.
B) $75.
C) $90.
D) $100.
E) None of the above.

A-1

Use the table below to answer the following question.
Table 1
Data From Eastland
Wages, salaries, and supplementary labour income
Farmers' income
Government expenditures on goods and services
Depreciation
Business investment
Personal income taxes net of transfer payments
Corporate profits
Indirect taxes
Net exports
Consumption expenditure
Interest and miscellaneous investment income

800
80
240
240
400
140
80
120
80
640
100

3) Refer to Table 1. From the information given in the table, the value of gross domestic product is A) $1,120.
B) $1,100.
C) $1,290.
D) $1,280.
E) $1,360.
4) The largest component of GDP from the income approach is
A) wages, salaries, and supplementary labour income.
B) corporate profits.
C) interest and miscellaneous investment income.
D) income of non-farm unincorporated businesses.
E) farmers' income.
5) Nominal GDP will increase
A) only if the average level of prices rises.
B) only if both the average level of prices rises and the quantity of goods and services produced increases.
C) only if the quantity of goods and services produced increases. D) if either the average level of prices rises or the quantity of goods and services produced increases.
E) only if the unemployment rate rises.

A-2

Use the table below to answer the following question.
Table 2
Data From Southton

Item
Rubber Ducks
Beach Towels

Price (dollars)
Base Year Current Year
1.00
1.25
9.00
6.00

Quantity (number of items)
Base Year
Current Year
100
100
12
14

6) Refer to Table 2. From the data in the table, compute Southon's nominal GDP in the current year. A) $209.
B) $226.
C) $197.
D) $208.
E) It cannot be calculated given the data.
7) When we use PPP we can make valid international comparisons of real GDP because we A) use official government data.
B) calculate the value of goods and services produced in two countries using the same quantities.
C) use the price data provided by the two countries but not the quantities. D) calculate the value of goods and services produced in two countries using the same prices. E) use data provided by the IMF.

Use the table below to answer the...
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