- •The International College of Economics and Finance macroeconomics Mock Exam April 8, 2005
- •Labor supply
- •Money supply growth
- •(C) Calculate value added at each stage of production
- •Consumption Expenditures Investment Unemployment
- •An increase in output and either increase or decrease in tax receipts;
- •Transactions costs
- •Interest rates Unemployment
- •Decreases production.
- •An increase in the availability of education and training
- •Resources are underemployed and an increase in demand will be satisfied without any pressure on the price level
- •Output and the price level are unchanged from their initial values.
- •Causes higher interest rates, which change the composition of output
- •Saving.
- •Investment.
- •No change in the level of saving
- •Changes in net tax revenues that are the result of a change in the level of economic activity
- •The provision of loans will rise by 400 million dollars.
- •I, II, and III only
- •The total amount of loans made by commercial banks will decrease
The International College of Economics and Finance macroeconomics Mock Exam April 8, 2005
Name_______________________ group________
SECTION I
Time - 70 minutes
Directions: Each of the sixty questions below is followed by five suggested answers. Select the one that is best in each case and then circle around the corresponding letter in your blank of answers. Good Luck!
All of the following are a flow except:
(A) Depreciation
(B) Government budget deficit
Saving
Labor supply
Business expenditures on plant and equipment
In a closed economy, ceteris paribus, if taxes rise:
(A) Consumption rises.
(B) National saving falls.
(C) Personal saving rises.
(D) Investment rises.
(E) Interest rate rises.
Which of the following is not an important variable in growth accounting calculations?
Productivity growth
Money supply growth
Labour growth
Capital growth
Output growth
If disposable income is 4,000, consumption is 3,500, government spending is 1,000 and tax revenues are 800, national saving equals to:
(A) 300 (B) 500 (C) 700 (D) 1,000 (E) 2,000
Which of the following item(s) should not be added to total final production when measuring GDP?
I. The new car sold by mother to her son.
II. The country house build by a carpenter for his family.
III. The gas bought by the driver of a taxicab.
IV. The oil bought to heat your house.
(A) Only I and II
(B) Only I, II and III
(C) Only I and III
(D) Only I, II and IV
(E) I, II, III and IV.
To avoid double counting when the GDP is estimated, economists
(A) Use the GDP deflator
(B) Calculate the GDP at factor costs
(C) Calculate value added at each stage of production
(D) Count goods for sale at retailed shops only
(E) All of the above
Which of the following is considered an imputed value in the GDP?
(A) The salary paid to a federal judge.
(B) The value of housing services enjoyed by homeowners.
(C) The value of automobile services enjoyed by car owners.
(D) The value-added of a shipping company that transports goods from the factory to retail stores.
(E) All of the above.
In which case is total expenditure in an economy not equal to total income?
(A) If total saving is larger than total investment.
(B) If net exports are not zero.
(C) If inventory investment is negative.
(D) If there is budget deficit.
(E) None of the above - they are always equal.
If there is an increase in the price of apples which causes consumers to purchase fewer pounds of apples and more pounds of oranges, the CPI will suffer from
(A) Base year bias.
(B) Substitution bias.
(C) Bias due to the introduction of new goods.
(D) Bias due to unmeasured quality change.
(E) None of the above.
Investors A, B and C each have $1000 to invest in the bond market. Investors A, B, and C believe the long-run normal rate of interest is 12%, 8%, and 7%, respectively. If the current market rate of interest is 9%, then
(A) Investor A will purchase bonds.
(B) Investors A and B will purchase bonds.
(C) Investors B and C will purchase bonds.
(D) Investor B will purchase bonds.
(E) Investors A, B, and C hold money for speculative purposes.
When aggregate demand exceeds output
(A) Injections exceeds leakages
(B) A recessionary gap exists
(C) An inflationary gap exists
(D) Leakages exceeds injections
(E) Keynes would call for a decrease in government spending
According to Keynesian theory, decreasing taxes and government spending by the same amount will most likely change consumption expenditures and investment in which of the following ways?