Economics 203 is the Principles Of Macroeconomics class. Depending on the Professor, the exams format may or may not be multiple choice. This quiz only covers materials from Chapters 7 and 8 from 6th Canadian Edition of Principles of Macroeconomics by Mankiw, Kneebone and McKenzie. You may try Midterm I and Final exams for questions from other chapters.
Disclaimer: While every reasonable effort is made to ensure that the information provided is accurate, no guarantees for the currency or accuracy of information are made. It takes several proof readings and rewrites to bring the quiz to an exceptional level. If you find an error, please contact me as soon as possible. Please indicate the question ID-Number or description because server may randomize the questions and answers.
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Economics (ECON 203-UCAL) Midterm Exam II
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Question 1 |
A | Purchase of military equipment for national armed forces. |
B | Payments made for the Members of the Parliament for their official work. |
C | Payments for companies who completed a project for the government. |
D | Government salaries paid to individuals. |
E | Payment of Employment Insurance to people who lost their jobs. |
Question 2 |
A | David Thompson |
B | Thomas Malthus |
C | Karl Marx |
D | Gergory Mankiw |
Question 3 |
A | Bonds from the Federal Government of Canada |
B | Bonds from the Federal Government of India |
C | Bonds from a Provincial Government in Canada |
D | Bonds from a major established company such as Apple Inc or Google Inc. |
Question 4 |
A | The government must be running a deficit budget. |
B | The country must be a developing or poor nation with a low GDP. |
C | The country must be experiencing a higher than normal inflation. |
D | The market of this particular country must be highly regulated. |
E | The manufacturing and services (quantity of output) must be negative. |
Question 5 |
A | quantity of human capital doubles. |
B | quantity of physical capital doubles. |
C | quantity of natural resources doubles. |
D | technology for production doubles. |
E | quantity of labour doubles. |
Question 6 |
A | the equilibrium conditions would not change. |
B | the equilibrium interest rate would increase. |
C | the equilibrium of lonable funds would be lower than that of the supply of lonable funds. |
D | the supply for lonable funds would be lower than the demand for lonable funds. |
Question 7 |
A | the supply of the available credits are greater than the demand for investments. |
B | tax collected by the government is lower than that of government spending. |
C | the supply of the available credits are lower than the demand for investments. |
D | tax collected by the government is equal to that of government spending. |
E | tax collected by the government is greater then that of government spending. |
Question 8 |
GDP = $9.5 trillion
Consumption spending = $4.0 trillion
Taxes = $6.4 trillion
Government transfers = $3.6 trillion
Government purchases = $4.0 trillion
A | $2.4 trillion |
B | $3.1 trillion |
C | $2.8 trillion |
D | $3.6 trillion |
E | $6.4 trillion |
Net taxes = $6.4 - $3.6 = $2.8 trillion
Question 9 |
A | The end of a Government of Canada GIC bond period, you will collect only the interest of the face value. |
B | Net exports do not include products exported or imported under free trade agreements such as NAFTA. |
C | Mutual funds companies buy stocks and bonds to maintain their portfolio. |
D | Publicly traded companies are always more stable than private organizations. |
E | The primary purpose of a banking system is the distribution of wealth through loans/mortgages. |
Question 10 |
A | It is a marketplace for international traders can meet national traders. |
B | It is a marketplace for companies to exchange their assets. |
C | It is a system fully controlled by the government which keeps the inflation in control. |
D | It is a system in which people who wants to save can supply funds for people who wants to borrow money. |
Question 11 |
A | decrease in productivity. |
B | advancement in technology. |
C | decrease in GDP. |
D | decrease in long term economic growth. |
Question 12 |
A | A measure of goods and services produced per person in a given country or population. |
B | A measure of net output of domestically produced goods. |
C | The ability of a country to produce goods at the lowest cost. |
D | A measure of goods and services available for consumers within a given economy. |
E | A measure of goods and services produced for each hour of a worker's time. |
Question 13 |
A | By dividing the entire equation by the quantity of labour, L. |
B | By dividing the entire equation by the quantity of natural resources, N. |
C | By dividing the entire equation by the quantity of human capital, H. |
D | By dividing the entire equation by the quantity of physical capital, K. |
Question 14 |
I. Buying a house with a mortgage to be paid off later.
II. Buying large volume of dry noodles to be sold at a higher price later.
III. Buying stock from Volkswagen AG to be sold at a higher price later.
IV. Buying government bonds to earn interest and face value later.
A | I and IV only |
B | All of the choices falls under equity finance. |
C | III and IV only |
D | II and III only |
E | IV only |
F | III only |
Question 15 |
A | Government funds |
B | Central banks |
C | Funds collected through interest |
D | Investments |
Question 16 |
A | Upward shift in the demand curve. |
B | Increase in price and decrease in interest rate. |
C | Decrease in price and increase in interest rate. |
D | Increase in interest rate. |
Question 17 |
A | regulated fixed government rate. |
B | market price. |
C | face value. |
D | remaining funds according to interest rates. |
Question 18 |
A | Diminishing returns |
B | Return to normal |
C | Economies of scale |
D | Catch-up effect |
Question 19 |
A | Emergence of a population with unsuitable educational and skills levels due to improper planing. For example, large enrollment in petroleum industry education when that country has no petroleum natural resources. |
B | Decrease in access to higher education among poor populations. |
C | Emigration of highly educated workers to first world countries. |
D | Politicians and policymakers in charge have no or little knowledge and skills in managing the economy. |
E | Increase in number of people in the workforce while decrease in the quality of education among them. |
Question 20 |
A | A decrease in demand for loanable funds. |
B | A decrease in supply of loanable funds. |
C | An increase in demand for loanable funds and a decrease in supply of loanable funds. |
D | None of the answers are correct. |
E | An increase in demand for loanable funds. |
Question 21 |
A | Increased in market for loanable funds. |
B | Higher productivity level. |
C | Government spending is higher than the tax revenue. |
D | Increased in government investments. Hint: If the government investments are balanced by the tax intake, it will not lead to a deficit. |
Question 22 |
A | $1050 million |
B | $1250 million |
C | $1025 million |
D | $1854 million |
E | $1080 million |
GDP_2040 = 1000 (1+0.025)^25 = $1854 million
Question 23 |
A | total amount of money that deposited in the bond market. |
B | total amount of money that is injected into the financial markets. |
C | total income in an economy after firms pay for capital goods. |
D | differences between government spending and its tax revenue. |
E | total income in an economy that remains after paying for consumption and government purchases. |
Question 24 |
A | ~ $100 |
B | ~ $80 |
C | ~ $120 |
D | ~ $90 |
present value = $110/(1.10)^1 = $100
Question 25 |
A | Having right tool for the right job, in other word, right physical capital, will drastically increase productivity. |
B | Production output of a company cannot be used as physical capital. |
C | For maximum productivity, the physical capital should satisfy the demands of the human capital. |
D | Physical capital is the equipment and structures used to produce goods and services. |
E | Technological knowledge is not a form of physical capital. |
Question 26 |
A | Net exports |
B | Productivity |
C | Domestic markets |
D | GDP |
E | Interest rates |
Question 27 |
A | catch up effect. |
B | Malthus effect. |
C | diminishing returns. |
D | constant return to scale. |
E | improvement of productivity. |
Question 28 |
A | Erica |
B | Sanuja |
C | Lauren |
D | Steven |
E | Manuja |
Sanuja = 20/5 = 4 wings/hr
Manuja = 30/6 = 5 wings/hr
Steven = 60/20 = 3 wings/hr
Erica = 18/8 = 1.5 wings/hr
Lauren = 55/20 = 2.75 wings/hr
Therefore, Manuja has the highest productivity.
Question 29 |
A | principle of of the bond. |
B | supply and demand. |
C | face value of the particular bond. |
D | number of coupons in the bond certificate. |
E | duration of the bond. |
Question 30 |
A | 6 years |
B | 5 years |
C | ~ 2.3 years |
D | ~ 4.3 years |
E | 30 years |
F | ~ 11.7 years |
70 / 6 = 11.6660... years
Question 31 |
A | 5% |
B | 100% |
C | 2.5% |
D | 10% |
Question 32 |
GDP = $9.5 trillion
Consumption spending = $4.0 trillion
Taxes = $6.4 trillion
Government transfers = $3.6 trillion
Government purchases = $4.0 trillion
A | 1.9 trillion dollars |
B | 0.4 trillion dollars |
C | -1.2 trillion dollars |
D | 5.5 trillion dollars |
E | 0.6 trillion dollars |
Public savings = $6.4 - $3.6 - $4.0 = -$1.2 trillion
Question 33 |
A | increase , raises , reduces |
B | decrease , raises , reduces |
C | increase , reduces , raises |
D | decrease , reduces , raises |
E | decrease , reduces , reduces |
F | decrease , raises , raises |
G | increase , raises , raises |
Question 34 |
A | the quantity of all other variables will be increased but less than that of human capital. |
B | the quantity of all other variables be will increased more than that of human capital. |
C | the quantity of output will be increased but less than that of human capital increase. |
D | the state of technology will also be tripled. |
E | the quantity of output will be increased more than that of human capital increase. |
F | the quantity of output will be tripled. |
Question 35 |
A | the quantity of output will be increased by more than triple the original amount. |
B | the quantity of output will be increased by six times the original amount. |
C | the quantity of output will be increased by more than double but less than triple the original amount. |
D | the quantity of physical capital doubles. |
E | the state of technology will be increased by at least triple the original amount. |
Question 36 |
A | Graph C |
B | None of the graphs depict the correct answer. |
C | Graph A |
D | Graph B |
E | Graph D |
Question 37 |
A | Public market policies |
B | Outward-oriented policies |
C | Inward-oriented policies |
D | Global market policies |
Question 38 |
A | There would be no change in the amount of lonable funds borrowed. |
B | There would be an increase in the amount of lonable funds borrowed. |
C | There would be a reduction in the amount of lonable funds borrowed. |
D | The change in lonable funds borrowed would be ambiguous. |
Question 39 |
A | Country A with a very high GDP with a rapid economic growth. |
B | Country E with a very low GDP and a very high emigration of highly educated workers. |
C | Country C with a very high GDP with a slow economic growth. |
D | Country D with a very low GDP with a slow economic growth. |
E | Country B with a very low GDP with a rapid economic growth. |
Question 40 |
A | Increase government spending on small scale projects but at large volumes. |
B | Reduce interest rates across all levels of funds. |
C | Increase tax on individuals and on industry. |
D | Encourage Canadians to invest outside of the country. |
Question 41 |
A | ~ $300 |
B | ~ $100 |
C | ~ $120 |
D | ~ $140 |
Question 42 |
A | Rate of change in inflation. |
B | Rate of change in nominal GDP. |
C | Rate of change in real GDP per capita. |
D | Rate of change in nominal GDP per capita. |
E | Rate of change in inflation per capita. |
F | Rate of change in real GDP |
Question 43 |
A | Productivity |
B | Inflation rate |
C | Population growth |
D | Real GDP |
E | Nominal GDP |
Question 44 |
A | increasing the immigration into a country. |
B | decreasing the minimum legal age of work hence increasing the available population for work. |
C | educating the workers. |
D | increasing (hiring) the number of workers per job. |
E | decrease taxes imposed on individual workers. |
Question 45 |
A | An investment that is financed with foreign money but operated by domestic residents. |
B | A capital investment that is owned and operated by a foreign entity. |
C | A multinational investment in a country where it is operated by the domestic residents. |
D | A capital investment made by individuals using personal wealth in a different country that their own. |
E | An investment made by a country using tax revenue in another country to boost federal reserves. |
Question 46 |
A | Renewable natural resources |
B | Large human capital |
C | Large physical capital |
D | Nonrenewable natural resources |
Question 47 |
A | Graph A |
B | Graph D |
C | Graph C |
D | Graph B |
Question 48 |
GDP = $9.5 trillion
Consumption spending = $4.0 trillion
Taxes = $6.4 trillion
Government transfers = $3.6 trillion
Government purchases = $4.0 trillion
A | $5.5 trillion |
B | $3.6 trillion |
C | $2.7 trillion |
D | $1.5 trillion |
E | $2.8 trillion |
Investments = GDP - Consumption - Govt Spending
I = $9.5 - $4 - $4 = $1.5 trillion
Question 49 |
A | It is the amount of money and other funds owe by a government to international lenders across the world. |
B | It is the difference between the amount of money printed by the central bank and the total national resources. |
C | It is the total accumulation of debt for a country since its it has been established. |
D | It is the total amount of debt accumulated by a government between elections. For example, every five years. |
E | It is the difference between tax collected and the government spending during a given year or a fixed period. |
Question 50 |
A | Discourage consumers from purchasing products made outside of Canada. |
B | Engage in military wars against countries with high manufacturing output such as China. |
C | Increase the printing of monetary funds (money) using government bonds as collateral to increase investments in manufacturing. |
D | Encourage investments in technology and human capital. |
E | Increase the exploitation of natural resources. |
Question 51 |
A | Investments made by private companies for future gains. |
B | Money saved by households after taxes and consumption. |
C | Savings made by private financial institutions such as banks. |
D | Savings made by private companies through profits. |
Question 52 |
A | None of the above graphs are correct. |
B | Graph A |
C | Graph C |
D | Graph B |
E | Graph D |
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51 | 52 | End |
Credits: Based on the excellent class notes provided by, Dr. Peter Tracey during Fall 2015 and textbook ISBN-978-0-17-653085-3.
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