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Econ Sample Exam
Econ Sample Exam
Econ Sample Exam
Fall 2009
PART 1
3 points each
Name: _____________________________
1.
Evidence from the past 40 years in the United States supports the
Fisher effect and shows that when the inflation rate is high, the
____ interest rates tends to be ____.
a. nominal; low
b. nominal; high
c. real; low
d. real; high
2.
3.
4.
The natural rate of unemployment in the United States since 1952 has
averaged between _____ and _____ percent.
a. 0; 1
b. 1; 3
c. 5; 6
d. 10; 15
5.
A1
6.
7.
Two economies are identical except that the level of capital per worker
is higher in Highland than in Lowland. The production functions in both
economies exhibit diminishing marginal product of capital. An extra
unit of capital per worker increases output per worker:
a. in Highland, but not in Lowland.
b. more in Highland.
c. more in Lowland.
d. by the same amount in Highland and Lowland.
8.
9.
When the real wage is above the level that equilibrates supply and
demand:
a. there is no unemployment.
b. the labor market clears.
c. the quantity of labor supplied exceeds the quantity demanded.
d. the quantity of labor demanded exceeds the quantity supplied.
10. It was recently reported that inflation in Iraq was very high,
exceeding 50 percent. Inflation of this magnitude is likely to:
i.
increase the demand for the dinar (Iraqi currency)
ii. increase the velocity of the dinar
iii. decrease the demand for the dinar
a. i. only
b. ii. only
c. i. and ii.
d. ii. and iii.
11.
In the steady state, the capital stock does not change because
investment equals:
a. consumption.
b. output per worker.
c. the marginal product of capital.
d. depreciation.
12.
The
a.
b.
c.
d.
13.
14.
All
a.
b.
c.
d.
15.
16.
17.
18.
19.
The
a.
b.
c.
d.
classical dichotomy:
cannot hold if money is neutral.
arises because money depends on the nominal interest rate.
is said to hold when the values of real variables can be determined
without any reference to nominal variables or the existence of
money.
fully describes the world in which we live, especially in the short
run.
A3
If a neutral
neoclassical
a. both the
b. both the
c. the real
rise.
d. the real
fall.
22.
A price index like the CPI _____ the change in the cost of
living because it _____ take into account that people can substitute
less expensive goods for ones that have become more expensive.
a. overestimates; does
b. overestimates; does not
c. accurately estimates; does
d. underestimates; does not
23.
24. Which of the following statements best demonstrates the long run
neutrality of money?
a. The Fed increases the money supply to reduce the likelihood of a
recession.
b. Congress votes to give tax rebate checks to most households to reduce
the likelihood of a recession.
c. A nations ability to produce is only a function of its capital,
labor and technology, not money.
d. An increase in savings account deposits causes an increase in money
as measured by M2.
A4
ii only.
ii. and iii.
i. and iii.
i., ii., and iii.
A5