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