ECO 372 Final Exam

Question no 1

Martha lends $200 to a friend who promises to return it after a year. Instead of lending it to her friend, Martha could have put the money in a bank where she could have earned an interest rate of 2 percent per annum. Martha’s opportunity cost of lending the money is _____.

Question no 2

The exhibit given below shows the short-run aggregate demand and supply curves in an economy, AD1 and AS1, and the long-run aggregate supply curve, LRAS. The economy was initially in equilibrium when there was a decrease in aggregate demand, causing a shift of the aggregate demand curve from AD1 to AD2.
Which of the following is true in this case?

Question no 3

Suppose an economy is in long-run equilibrium. An increase in consumption expenditure will:

Question no 4

In the long run, a higher saving rate:

Question no 5

Suppose the net foreign investment in Italy is positive. This implies that:

Question no 6

The circular-flow diagram shows that:

Question no 7

The table given below shows the total amount of spending in the country of Macedonia. Mesodonia’sgross domestic product is:

Question no 8

The country of Merilyn exported goods and services worth $1.2 million and imported goods and services worth $2.7 million. The net exports of the country were _____.

Question no 9

Suppose the Fed purchases government bonds through open-market operations. All other things remaining equal, this is likely to:

Question no 10

A rise in the price of bacon from $14 per pound to $16 per pound will reduce the purchasing power of the dollar by:

Question no 11

A difference between commodity money and fiat money is that:

Question no 12

Suppose the net capital outflow from Zenovia is negative. This implies that:

Question no 13

There is an increase in human capital when _____.

Question no 14

After retirement, Molly deposits $500,000 in a local bank in Merrina. At an interest rate of 4 percent, she will receive approximately _____ after 3 years.

Question no 15

Ruth wants to calculate the present value of a sum of money that she will receive after the demise of her grandparents. To calculate the present value, she should use the:

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Question no 16

The buyers and sellers in the country of Perylia use corn as a medium of exchange. This means that:

Question no 17

Scarcity occurs because of:

Question no 18

The Phillips curve shows:

Question no 19

Ephlon Inc., an Italian bike manufacturer, opens a factory in the United States. This is an example of:

Question no 20

Jack is an out-of-work sculptor. He has been looking for a job for the last two years. Unable to find any, he has given up his job search. Which of the following is true in this case?

Question no 21

Suppose the central bank of a country undertakes an expansionary monetary policy. Which of the following is most likely to be the effect of such a policy, all other things remaining unchanged?

Question no 22

Following the unexpectedly good performance of Leather, all its employees were given a one-time bonus. This consequently led to a rightward shift of the demand curve for shoes manufactured by the company and a leftward shift of the demand curve for socks. This shows that shoes are:

Question no 23

A higher interest rate in a country:

Question no 24

If the price level in an economy is 120 and the equilibrium price level is 100, _____.

Question no 25

A recent survey showed the health benefits of cranberry juice for treating the heart and other respiratory disorders. The exhibit below shows that the initial demand curve for cranberry juice is D1. Which of the following is likely to be a consequence of the publication of the survey?

Question no 26

Keynesian economists believe that when an economy is in a recession, the government should:

Question no 27

The Marion purchased a Persian rug worth $5,000 from an Iranian textile mill. Everything else remaining unchanged, this will:

Question no 28

As more capital is used in the production process, the number of other inputs being fixed, the production function becomes:

Question no 29

The natural rate of unemployment in a country is 4 percent. This implies that:

Question no 30

Which of the following is true according to the circular-flow diagram?