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