Econ 1120 – intro macro – Spring-2012 –March 1, 2012 regular-up prelim #1 (Thursday) print your name: Your C. U. Netid: your c. U. Student number



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Econ 1120 – INTRO MACRO – Spring-2012March 1, 2012

REGULAR-UP PRELIM #1 (Thursday)
PRINT YOUR NAME: ____________________________________ Your C.U. Netid: _____________
YOUR C.U. STUDENT NUMBER: ____________________________


Check YOUR TA’s NAME:

_____________TA = Xinli Wang (Monday sections)

_____________TA = Wei Quan (Tuesday sections)

_____________TA = Lingwen Zheng (Wednesday sections)

_____________TA = Minwook Kang (Wednesday sections)

_____________TA = Liyuan Cui (Thursday sections)


INSTRUCTIONS:
There are two sections in this exam

  • Part I: 15 multiple choice questions @ 3 points each

  • Part II: 3 short answer question (22 points) + 2 Newspaper Article questions (33 points)

  • ANSWER ALL QUESTIONS. TOTAL POINTS = 100. TOTAL TIME = 90 minutes.

  • Prelim1 score weights 30% of final grade.

  • Please number each exam book from 1 to 6 and write your ID, name and section TA on the front page of each book.




  • Please write down your answers in different exam books with following order.

    • Multiple choice questions in exam book1.

    • Short Essay 1 in exam book2

    • Short Essay 2 in exam book3

    • Short Essay 3 in exam book4

    • Long Essay 1 in exam book5

    • Long Essay 2 in exam book6



AGAIN, please….
PRINT YOUR NAME: ____________________________________ Your C.U. Netid: _____________
YOUR C.U. STUDENT NUMBER: ____________________________
_____________TA = Xinli Wang (Monday sections)

_____________TA = Wei Quan (Tuesday sections)

_____________TA = Lingwen Zheng (Wednesday sections)

_____________TA = Minwook Kang (Wednesday sections)



_____________TA = Liyuan Cui (Thursday sections)

GRADING----------------------------------------------------------------------------------------------------------
________/45 (mc)______/8(short essay 1) ______/8(short essay 2) ______/6(short essay 3) ________/20(long essay 2)________/13(long essay 2)

TOTAL: ___________/100
--------------------------------------------------------------------------------------------------------------------------
Part I: Multiple Choice.



  1. When government sets floor price higher than the market equilibrium price, the policy is ______, and consumer surplus is _____

  1. effective, maximized

  2. effective; not maximized

  3. not effective; not maximized

  4. not effective; maximized

  5. none of the above



  1. In a closed economy with government, which of the following condition needs to be satisfied when the economy is at equilibrium?

  1. Y=AE = C+I+G-T

  2. S+T=I+G

  3. S+G = T+I

  4. AE = C+I+G = Yd = Y-T

  5. None of above




  1. When the Federal Reserve wants to decrease the money supply in the economy, it can apply which of the following policies?

  1. decreasing the required reserve ratio

  2. increasing the required reserve ratio

  3. decreasing the discount rate

  4. increasing the discount rate

  5. through an open market operation, by purchasing bonds from the public

  6. through open market operation, by selling bonds to the public



    1. I or IV or V

    2. II or III or VI

    3. I or III or V

    4. II or IV or VI

    5. None of the above




  1. When aggregate output(income) is to the right of the equilibrium level of GDP



  1. Y>(Planned) AE and there will be an unplanned rise in inventories

  2. Y<(Planned) AE and there will be an unplanned fall in inventories

  3. Y>(Planned) AE and there will be an unplanned fall in inventories

  4. Y<(Planned) AE and there will be an unplanned rise in inventories




  1. A used car company, The Car-Max, purchased a used car for $10,000 in January, 2012 and sold it to Bob for $12,000 in March, 2012. How much of value is added in 2012 GDP through the sale of the car to Bob?

  1. $0

  2. $2,000

  3. $10,000

  4. $12,000



  1. An economy experiences inflation and a decrease in real GDP at the same time. What is happening to nominal GDP?

  1. Stay the same.

  2. Goes up

  3. Goes down

  4. Could go up or down



  1. Suppose pizza and beer are complements. What can we conclude?

  1. An increase in the price of pizza will cause increase in the demand for beer.

  2. An increase in the price of pizza will cause decrease in the demand for beer.

  3. An increase in the price of pizza will cause increase in the supply for beer.

  1. An increase in the price of pizza will cause increase in the supply for beer.



  1. For companies which have stocks traded at NYSE, New York Stock Exchange, what types of firms are they shares of?

  1. proprietorship

  2. partnership

  3. corporation

  4. parastatal

  5. Any of the above

  6. None of the above



  1. The value of output produced by Nike’s company in Indonesia is part of ____. The profits of the company which are repatriated to the US on the other hand are part of US ____ but not US ____

  1. Indonesia’s GDP; GNP; GDP

  2. Indonesia’s GDP; GDP; GNP

  3. US GDP; GNP; GDP

  4. US GNP; GNP; GDP




  1. Who are included in the number of unemployed people in the US?

  1. the inmates in the jail of San Francisco

  2. my neighbor, who was fired a few days ago and is trying to find a new job

  3. the 19 year old son of a farmer who helps his father on a farm but does not receive a wage

  4. A full time student at Cornell

  5. None of above




  1. For an economy to produce an output combination beyond its current PPF, the economy must

  1. discover a new resource.

  2. produce more of one good and less of another.

  3. waste less resources.

  4. reduce its inputs.

  5. improve production technology



  1. I or V

  2. II or III

  3. I or II

  4. II or IV

  5. None of the above




  1. The equilibrium price of apple will certainly increase if?

  1. the supply of apple decreases and the demand for apple decreases

  2. the supply of apple increases and the demand for apple decreases

  3. the supply of apple decreases and the demand for apple increases

  4. the supply of apple increases and the demand for apple increases




  1. Suppose the consumption function were defined as: C = 500 + 0.75(Y-T). What is the tax increasing multiplier?

  1. 4

  2. 3

  3. -3

  4. -4

  5. None of above



  1. When your aunt attended Cornell in 1985, she paid $500 per month for rent. Coincidentally, you now live in the same apartment in which she lived, and pay $1100 for rent. Suppose that the CPI in 1985 was 110, and in 2012 is 220:

  1. It cannot be determined from the information given

  2. In real terms, you're paying less than your aunt

  3. In real terms, you're paying the same amount

  4. In real terms, you're paying more than your aunt

15. Suppose the marginal propensity to save is 0.1. What is the balanced budget multiplier?



  1. 0.9

  2. 10

  3. 1

  4. 9

  5. None of above.


Part II: Short Essays (22 points)

1. Unemployment in Michigan (8 points)

Michigan's incredible shrinking workforce


By Tami Luhby @CNNMoney February 24, 2012: 4:00 PM ET

NEW YORK (CNNMoney) -- As the presidential race moves to Michigan for next week's primary, a lot of focus is on the state's economy -- one of the hardest-hit by the recession.

But things are changing in the Great Lakes State. After leading the nation in unemployment for four years, Michigan has finally dropped out of the Top 10. State unemployment slid to 9.3% in December, only a touch higher than the national rate, and a sharp decline from the 14.1% rate that Michigan hit in the fall of 2009.

And last year was the first time the state added any jobs since the turn of the 21st Century.

Sounds great, huh? Well, hold the applause.

The main reason Michigan's unemployment rate is falling is because its labor force is shrinking fast, economists said. The state has lost 4.6% of its workforce since the recovery began in mid-2009, according to Donald Grimes, senior research specialist at the University of Michigan.

2011 was a rocking year for American automakers, the lifeblood of Michigan's economy. It was the first time since 2004 that all three major U.S. automakers were profitable at the same time. And it came only two years after two of them declared bankruptcy and had to be bailed out by the federal government.



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