Practice exam (mid-term)

Topics: Money, Macroeconomics, Money supply Pages: 4 (1149 words) Published: October 25, 2014
Practice Exam For Spring 2013
(80 minutes)
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) The Bigdrill company drills for oil, which it sells for $200 million to the Bigoil company to be madeinto gas. The Bigoil company’s gas is sold for a total of $600 million. What is the total contribution to the country’s GDP from companies Bigdrill and Bigoil? A) $800 million B) $400 million

C) $600 million
D) $0 million
E) $200 million
2) The three approaches to measuring economic activity are the A) private, public, and international approaches.
B) product, income, and expenditure approaches.
C) cost, income, and expenditure approaches.
D) consumer, business, and government approaches.
E) none of the above
3) Which of the following is included in U.S. GDP?
A) A newly constructed house
B) The purchase of a watch from a Swiss company
C) The sale of a new car from a manufacturer s inventory produced in previous year D) The sale of a used car
E) none of the above
4) Suppose the consumption equation is represented by the following: C = 500 + .75YD. The multiplier in this economy is:
A) .2.

B) .8. C) 1.

D) 4.

E) 5.

5) Suppose business confidence increases causing an increase in investment. Based on our understanding of the model presented in Chapter 3, we know with certainty that an increase in investment will cause:

A) an increase in output.
B) an increase in the multiplier.
C) a reduction in the marginal propensity to save.


D) a reduction in the multiplier.
E) both A and D
6) Which of the following is definitely true for any given point on the LM curve A) there is no inventory investment
B) production is equal to demand
C) the goods market is in equilibrium
D) all the above
E) none of the above
7) Which of the following will cause an increase in money demand? A) the introduction of credit cards into the economy
B) a reduction in the interest rate
C) an increase in...
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