AP/ECON 1010 Introduction to Macroeconomics
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AP/ECON 1010 Introduction to Macroeconomics
SAMPLE TEST 1
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Which Version of the Test are you writing?
A) Version A B) Version B C) Version C
2) Which of the following statements is true?
A) Final goods and services produced in Canada by foreigners are exports.
B) Final goods and services produced in Canada by foreigners are part of Canada's GDP.
C) Final goods and services produced in Canada by foreigners are imports.
D) Final goods and services produced in Canada by foreigners are part of the foreign country's GDP.
E) Final goods and services produced abroad by Canadians are part of Canadian GDP.
3) An art collector recently sold a piece of pottery for $300. He had purchased it for $200 two years earlier. How will the most recent sale affect GDP?
A) GDP will increase by $300.
B) GDP will increase by $100.
C) GDP 2 years ago must be adjusted downwards by $200, and current GDP will rise by $300.
D) GDP is unaffected.
E) GDP will increase by $200.
4) In recent history, real GDP has risen less rapidly than nominal GDP. This is because
A) the general price level rose.
B) capital increased.
C) the level of population rose.
D) the general price level fell.
E) the goal of zero population growth has been reached.
Use the table below to answer the following questions.
Table 20.2.5
Data from Southton
Price (dollars) Quantity (number of items)
Item |
Base |
Year |
Current Year |
Base Year |
Current Year |
Rubber Ducks |
1.00 |
|
1.25 |
100 |
100 |
Beach Towels |
9.00 |
|
6.00 |
12 |
14 |
5) Refer to Table 20.2.5. From the data in the table, compute Southton's real GDP in the base year.
A) $197
B) $226
C) $208
D) $209
E) It cannot be calculated given the data.
6) Real GDP
A) grows at a constant 3 percent per year.
B) fluctuates around potential GDP.
C) equals potential GDP in the base year.
D) fluctuates from year to year but is always below potential GDP.
E) equals potential GDP when the price level is constant.
7) Given that pollution is a by-product of some production processes,
A) GDP accountants adjust GDP downward.
B) GDP tends to overstate economic well-being.
C) GDP tends to understate economic well-being.
D) GDP accountants adjust GDP upward.
E) GDP accountants do not adjust GDP unless pollution is a serious problem.
8) At 2012 prices, the value of production in 2013 was 2 percentage points higher than in 2012. At 2013 prices, the value of production in 2013 was 4 percentage points higher than in 2012. The chained-dollar real GDP is ________ in 2013 than in 2012.
A) 3 percent smaller
B) 2 percent smaller
C) 4 percent greater
D) 2 percent greater
E) 3 percent greater
9) Which one of the following people would be counted as unemployed in Canada?
A) Sharon recently began looking for work after staying at home for 10 years to look after her children.
B) Kanhaya has stopped looking for work since he was unable to find a suitable job during a two -month search.
C) Taylor is a homemaker.
D) Doris works only 5 hours a week but is looking for a full-time job.
E) Maurice is on a two -month vacation out of the country but is still looking for a job using the Internet.
10) In a country with a working-age population of 20 million, 13 million are employed, 1.5 million are unemployed, and 1 million of the employed are working part-time, half of whom wish to work full-time. The size of the labour force is
A) 15.5 million.
B) 11.5 million.
C) 20 million.
D) 14.5 million.
E) 13 million.
11) The working-age population can be divided into two groups:
A) those who work full time and those who work part time.
B) those who are employed and those who are unemployed.
C) those who are over the age of 15 and those who are under the age of 15.
D) those in the labour force and discouraged workers.
E) those in the labour force and those not in the labour force.
12) In a country with a working-age population of 30 million, 18 million are employed, 2 million are unemployed, and 2 million of the employed are working part-time, half of whom wish to work full-time. If 1 million of those unemployed are cyclically unemployed, what is the natural unemployment rate?
A) 11.1 percent
B) 6.7 percent
C) 1 percent
D) 5 percent
E) 5.6 percent
13) Michael lost his job as a night security guard because he kept falling asleep at the job. Now he is looking for a new job. Michael is
A) frictionally unemployed.
B) structurally unemployed.
C) not unemployed.
D) cyclically unemployed.
E) not in the labour force.
14) When the unemployment rate ________ the natural unemployment rate, real GDP ________
potential GDP.
A) is less than; is less than
B) equals; is less than
C) is greater than; equals
D) equals; is greater than
E) is greater than; is less than
15) The technique used to calculate the CPI implicitly assumes that consumers buy
A) relatively more of goods with relative prices that are increasing.
B) more computers and CD players and fewer black -and-white TVs.
C) relatively less of goods with relative prices that are decreasing.
D) goods and services whose quality improves at the rate of growth of real GDP.
E) the same relative quantities of goods as in a base year.
16) If there is a 5 percent increase in the CPI, then there will most likely be
A) a less than 5 percent rise in the cost of living because of consumers substituting away from goods whose relative prices rise towards other goods.
B) a 5 percent rise in the cost of living.
C) a less than 5 percent rise in the cost of living because of falling quality of goods over time.
D) a more than 5 percent rise in the cost of living because of consumers substituting away from goods whose relative prices rise towards other goods.
E) a more than 5 percent rise in the cost of living because of the introduction of new goods.
17) Comparing the core inflation rate to the Consumer Price Index, the core inflation rate
A) measures all goods produced, not just consumer goods.
B) excludes the volatile elements of the CPI.
C) controls for the biases of the CPI.
D) uses current period quantities, not base period quantities.
E) includes volatile elements not in the CPI.
18) Suppose a country's population grows by 2 percent a year and, at the same time, its real GDP grows by 5 percent a year. Real GDP per person is increasing by ________ a year.
A) 16 percent
B) 3 percent
C) 10 percent
D) 5 percent
E) 2 percent
19) Using the Rule of 70, if the country of Flowerdom's current growth rate of real GDP per person is 7 percent a year, how long will it take the country's real GDP per person to double?
A) 1 year B) 2 years C) 7 years D) 10 years E) 49 years
20) Canada's economic growth rate was highest in which of the following decades?
A) the 1930s
B) the 1960s
C) the 1970s
D) the 1980s
E) the 1990s
Use the figure below to answer the following question.
Figure 22.3.1
21) Refer to Figure 22.3.1. The country of Kemper is on its aggregate production function at point W in the above figure. If the population increases with no change in capital or technology, the economy will
A) remain at point W.
B) move to point such as Y.
C) move to point such as Z.
D) move to point such as X.
E) either remain at point W or move to point X.
22) When the population increases with no change in labour productivity, employment ________
and potential GDP ________.
A) decreases; decreases
B) increases; does not change
C) decreases; increases
D) increases; decreases
E) increases; increases
23) Ceteris paribus, an increase in labour productivity results in a
A) lower real wage rate and higher potential GDP per hour of labour.
B) higher real wage rate and higher potential GDP per hour of labour.
C) higher real wage rate and lower potential GDP per hour of labour.
D) constant real wage rate in the long run.
E) lower real wage rate and lower potential GDP per hour of labour.
24) The Acme Stereo Company had capital of $24 million at the beginning of the year. At the end of the year, the firm had a capital stock of $20 million. Its
A) gross investment was zero.
B) net investment was some amount but we need more information to determine the amount.
C) net investment was $4 million for the year.
D) depreciation was $4 million.
E) net investment was -$4 million for the year.
25) The funds used to buy physical capital are
A) saving.
B) investment.
C) net investment.
D) wealth.
E) financial capital.
26) At the beginning of the year, your wealth is $10,000. During the year, you have an income of $90,000 and you spend $80,000 on consumption goods and services. You pay no taxes. Your wealth at the end of the year is
A) $10,000.
B) $90,000.
C) $100,000.
D) $20,000.
E) $0.
27) Suppose Canada spends more on foreign goods and services than foreigners spend on our
goods and services. Then
A) Canada must borrow an amount equal to national saving.
B) the Bank of Canada will raise the foreign exchange rate of the Canadian dollar.
C) the rest of the world may or may not finance Canada's trade deficit.
D) Canada must borrow an amount equal to consumption expenditure plus investment.
E) Canada must borrow an amount equal to imports minus exports.
28) Which of the following influences household saving?
I. The real interest rate
II. Disposable income
III. Expected future income
A) I only
B) II and III only
C) I, II, and III only
D) I and II only
E) I and III only
29) As the ________ interest rate increases, the quantity of loanable funds demanded ________.
A) nominal; increases
B) real; decreases
C) nominal; decreases
D) real; increases
E) none of the above. There is no relationship between interest rates and loanable funds.
30) The crowding-out effect refers to
A) private investment crowding out government saving.
B) government spending crowding out private spending.
C) private saving crowding out government saving.
D) private saving crowding out net taxes.
E) a government deficit crowding out investment.
31) A government budget surplus occurs, which ________ loanable funds. The real interest rate ________, household saving ________, and investment ________.
A) increases the supply of; falls; decreases; increases
B) decreases the demand for; falls; decreases; increases
C) decreases the supply of; decreases; decreases; increases
D) increases the demand for; rises; increases; decreases
E) increases the supply of; falls; increases; decreases
2023-04-13