ECO 372 Final Exam MCQ Study

30 Questions and answers included in attachment!
1. the largest source of household income is in the U.S. is obtained
a. stock dividends
b. wages and salaries
c. interest earnings
d. rental income

2.the market where business sell goods and services to households and the government is called
a. goods market
b. factor market
c. capital market
d. money market

3.real gross domestic product is best defined as
a. the market value of intermediate goods and services produced in an economy including exports
b. all goods and services produced in an economy, stated in prices in a given year and multiplied by quantity
c. the market value of all final goods and services produced in an economy stated in the prices of a given year
d. the market value of goods and services produced in an economy stated in current year prices

4. underemployment includes
a. who work off the books to avoid paying taxes
b. who are working part time or not using all their skills at a fulltime job
c. who are tired of looking for a job soo they quit looking but still want one
d. whose skills are not in demand anymore

5.the bureau of economic analysis is responsible for whicj of the following
a. setting interest rates
b. managing the money supply
c. calculating the US gross domestic product
d. paying unemployment benefits

6.the federal reserve provides which of the following data
a. federal funds rate
b. stock price of GE
c. bond yields of corporation
d. debt to GDP of Ireland

7. Consider if the government instituted a 10% income tax surcharge. In terms of the AS/AD model this change should have
a. shifted the AD curve to the left
b. shifted the AD curve to the right
c. made the AD curve flatter
d. made the AD curve steeper

8.if the depreciation of a country’s currency increases it aggregate expenditures by 20, the AD curve will
a. shift right by more than 20
b. shift right by less than 20
c. shift right by exactly 20
d. not shift at all

9. Aggregate demand management policies are designed most directly to
a. minimize unemployment
b. minimize inflation
c. control the aggregate level of spending in the economy
d. prevent budget deficits or surpluses

10.suppose that consumer spending is expected to decrease in the near future. If output is at potential output, which of the following policies is most appropriate according to the AS/AD model
a. an increase in government spending
b. an increase in taxes
c. a reduction in government spending
d. no change in taxes or government spending.

22) Considering an economy with a current trade deficit and considering only the direct effect on income, an expansionary monetary policy tends to

A. decrease the exchange rate and increase the trade deficit
B. increase the exchange rate and increase the trade deficit

C. decrease the exchange rate and decrease the trade deficit
D. increase the exchange rate and decrease the trade deficit

23) The balance of trade measures the

A. difference between the value of imports and exports

B. share of U.S. imports coming from various regions of the world

C. share of U.S. exports going to various regions of the world

D. exchange rate needed to make imports equal exports

24) When a country runs a trade deficit, it does so by:

A. borrowing from foreign countries or selling assets to them.

B. borrowing from foreign countries or buying assets from them.

C. lending to foreign countries or selling assets to them.

D. lending to foreign countries or buying assets from them.

25) Expansionary fiscal policy tends to

A. raise U.S. income, increase U.S. imports, and increase the trade deficit

B. raise U.S. income, increase U.S. imports, and lower the trade deficit

C. lower U.S. income, reduce U.S. imports, and increase the trade deficit

D. lower U.S. income, reduce U.S. imports, and lower the trade deficit

26) In considering the net effect of ECO 372 Final Exam expansionary fiscal policy on the trade deficit, the

A. income effect offsets the price effect

B. price effect offsets the income effect

C. income and price effects work in the same direction, so the trade deficit is decreased
D. income and price effects work in the same direction, so the trade deficit is increased

27) If U.S. interest rates fall relative to Japanese interest rates and Japanese inflation falls relative to U.S. inflation, then the

A. dollar will lose value in terms of yen

B. dollar will gain value in terms of yen

C. dollar’s value will not change in terms of yen

D. change in the dollar’s value cannot be determined

28) Expansionary monetary policy tends to

A. lower the U.S. interest rate and increase the U.S. exchange rate

B. lower the U.S. interest rate and decrease the U.S. exchange rate

C. increase the U.S. interest rate and decrease the U.S. exchange rate
D. increase the U.S. interest rate and increase the U.S. exchange rate

29) The U.S. has limits on Chinese textile imports. Such limits are an example of

A. a tariff

B. a quota

C. a regulatory trade restriction

D. an embargo

30) Duties imposed by the U.S. government on imported Chinese frozen and canned shrimp are an example of

A. tariffs

B. quotas

C. voluntary restrictions
D. regulatory trade restrictions

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