Midterm Exam winter 2023-2024

Date: Thursday, 13/11/2023.

Course Title: Introduction to Macroeconomics (BCOR 240)
Duration: 2 hours
Groups: All groups.
Number of pages: 6

INSTRUCTIONS

1. Cell phones, books and notes are strictly not permitted.

2. Only non-scientific (no memory) calculators are permitted.

3. Choose one answer; choosing more than one answer is graded zero.

4. Record your answer on the answer sheet provided in page 6.

Name: -----------------------------------------------------------------------------------------------------------------

ID: ---------------------------------------------------------------- GR: -----------------------------------------------

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 MCQ (100 pts)
1) Which of the following is a macroeconomic 9) Increase in demand can occur due to:
problem? A. Increase in income of the consumer
A. what do plumbers earn more than janitors B. Decrease in price of the complementary
B. the reasons for the increase in average good
prices C. Increase in price of the substitutes
C. whether the army should buy more tanks D. All of these
or more missiles 10) Movement along the demand curve
D. the reasons for the increase in the price of illustrates:
orange juice A. shift in quantity demanded
2) Changes in exogenous variable ______ B. complement effect
A. has no effect on the graphic C. change in quantity demanded
B. shift curve D. income effect
C. moves along the curve 11) Increase in demand is shown by demand
D. none of these answers curve when:
3) The study of determining the prices in A. The curve shifts right
individual markets is called ______ B. The curve shifts left
A. Negative economics C. Movement along the curve there is no
B. Microeconomics change
C. Positive economics D. Movement along the curve
D. Macroeconomics 12) The difference between real GDP and
4) Macroeconomics is where students learn nominal GDP is that:
how to think about the economy as ______ A. Real GDP measures total value of goods
A. One market of goods and services and services with adjustment for inflation,
B. Multi -markets that affect each other and nominal GDP is not adjusted for
C. One market including firms and consumers inflation.
D. Two markets: labors and goods B. Real GDP measures unadjusted values of
5) Macroeconomic models are used to explain final goods and services whereas nominal
how ______ variables influence GDP is inflation adjusted.
______variables. C. Real GDP measures unemployment in
A. Endogenous; exogenous current years, whereas nominal GDP
B. Exogenous; endogenous measures unemployment in past years.
C. Microeconomic; macroeconomic D. Nominal GDP measures inflation, whereas
D. Macroeconomic; microeconomic real GDP does not measure unemployment.
6) Variables that a model takes as given are 13) The relationship between Gross Domestic
called: Product (GDP) and Gross National Product
A. Endogenous (GNP) is that:
B. Exogenous A. GDP=GNP + Net Exports
C. Market clearing B. GDP=GNP - Net Exports
D. Macroeconomic C. GDP=GNP + Depreciation
7) The law of demand states, with increase in D. GDP=GNP-Depreciation
price there is: 14) All of the following would be included in the
A. Decrease in quantity demanded expenditure approach to calculate GDP
B. Increase in quantity demanded except:
C. Decreased demand A. Consumer spending
D. Increased demand B. Government investments
8) Which of the following is not a cause of the C. Private investments
shift in demand for a product? D. Consumer spending and savings
A. Change in the price of substitutes E. Net exports
B. Change in the income of a consumer 15) How is the GDP deflator used?
C. Change in the price of a product A. To calculate nominal GDP
D. None of the above B. To deflate the Consumer Price Index
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 C. To calculate real GDP. 21) Jessica received her college degree in
D. To calculate inflation. computer science and was offered a job at
16) How do you calculate the consumer price IBM. She decides to take a year off and
index or CPI? travel throughout Europe. What would this
A. Diving the annual GDP by the price of decision do to the unemployment rate?
basket and multiply by 100. A. An increase in the unemployment rate
B. Diving the base year GDP by the price of B. A decrease in the unemployment rate
basket of goods & services of the current C. A decrease in the labor force
year and multiply by 100. D. No change in the unemployment rate
C. Diving price of basket in base year by the
price of basket of goods & services of the According to the table above, answer questions
current year and multiply by 100. 22 and 23:
D. Diving the price of basket of goods &
services of the current year and multiply Year Good Quantity Price
by the price of basket in base year and 2022 Dress 200 $30
multiply by 100. (Base year) Blouse 10 $10
17) Consumer price index (CPI) is: Dress 100 $40
2023
A. A measure which provides the most Blouse 30 $10
complete outlook of the entire economy of 22) In 2023, real GDP is:
nation. A. 3300
B. A measure of the overall cost of the goods B. 4300
and services bought by a typical consumer. C. 1800
C. A measure of the ability of a typical person D. 3700
in a society to obtain goods and services. 23) In 2023, the GDP deflator is:
D. A measure of how much debt a typical A. 51.5
person has in a given society. B. 43.5
18) The goods sold to ultimate or final C. 130.3
purchasers are called: D. 37.00
A. Final goods and services 24) Gross private domestic investment is all
B. Primary goods. purchases of newly produced business
C. Intermediate goods. capital goods and buildings________
D. All of them A. minus the change in business inventories.
B. plus the change in business inventories plus
Refer to the following chart to answer residential construction.
questions 19 and 20. C. plus fixed investment minus inventory
investment.
Employed 8000 D. plus purchases of capital goods produced in
Unemployed 1000 previous years to replace any depreciated
Not in the labor force 500 capital goods.
19) According to the chart, the unemployment 25) Given the following data from a small tiny
rate is: nation, compute the real GDP for year 2021
A. 10.5% using 2020 as the base year
B. 12.5%
C. 11.1% Price of Quantity Price of Quantity
Year
bread of bread butter of butter
D. 1.75%
2019 $1 100 $2 50
20) According to the chart, the size of the labor
2020 $1.5 200 $3 150
force is: 2021 $2 250 $4 200
A. 7500
A. $750
B. 9000
B. $850
C. 9500
D. 6500 C. $675
D. $975
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26) Suppose disposable income increases from 33) A nation's net exports consist of:
$7 trillion to $7.5 trillion, consumption A. Its exports plus its imports.
expenditure increases from $6.5 trillion to B. Its exports minus its imports.
$6.9 trillion. Thus, the MPC must equal to: C. Its exports plus all other nation's imports.
A. 0.70 D. Its imports plus all other nation's exports.
B. 0.80 34) Suppose the stock of capital remains
C. 0.40 constant. By adding more labor, perhaps a
D. 1.00 second work shift, output:
27) Dennis decides to loan his friend some A. Decreases
money. He would like to see a 5% return on B. Increases
the loan. If the current rate of inflation is C. Remains the same
15%, what should he charge as an interest D. Becomes more costly
rate? 35) A wage rate that is adjusted for changes in
A. 10% the price level is known as the:
B. 20% A. Real wage.
C. 25% B. Nominal wage
D. 12% C. Minimum wage
28) Which of the following equations represents D. Functional wage
national saving (S) in a closed economy? 36) If the real wage rises:
A. Y – I – G – NX A. The marginal cost of labor falls
B. Y – C – G B. The marginal benefit of the worker
C. Y – I - C increases
D. G + C – Y C. Firms will hire additional labor
29) Suppose that in a closed economy D. Firms will hire less labor
GDP=10000, Taxes=1500, Consumption 37) The marginal benefit of a worker to a firm
C=6500, and Government expenditures is the value of the extra output that results
G=2000; then, national saving (S) is equal when:
to: A. Some workers are laid off and the
A. – 500 remaining workers become more
B. 0 productive
C. 1500 B. An additional worker is hired.
D. None of the above are correct. C. Workers get paid for working overtime
30) The relationship between consumer D. Work is outsourced to a foreign country
spending and income is known as the: 38) An increase in the supply of labor will
A. Consumption function. ________ real wages and ________
B. Rate of income. employment.
C. Inflation rate. A. increase; increase
D. rate of individual wealth. B. increase; decrease
31) When there is a decrease in labor supply, C. decrease; increase
real wages are likely to: D. decrease; decrease
A. Remain the same 39) Disposable income is equal to:
B. Allow less leisure time A. consumption expenditure minus taxes plus
C. Decrease transfer payments.
D. Increase B. aggregate income minus taxes plus
32) The knowledge and skills acquired by a government expenditures on goods and
worker through education and experience is services.
a description of: C. aggregate income minus taxes plus transfer
A. Physical capital payments.
B. Human capital D. aggregate income plus transfer payments.
C. Labor 40) A consumption function shows a:
D. Entrepreneurship A. negative (inverse) relationship between
consumption expenditure and saving.

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 B. positive (direct) relationship between B. the sum of wages, salaries, corporate
consumption expenditure and the price level. profits, rents and interest.
C. negative (inverse) relationship between C. only the state of technology.
consumption expenditure and disposable D. the quantities of labor, capital and the state
income. of technology.
D. positive (direct) relationship between 46) The demand for loanable funds curve is:
consumption expenditure and disposable A. downward sloping when plotted against the
income. real interest rate.
41) The consumption function shows how B. vertical at the full employment level of
much: investment.
A. all households plan to consume at each C. constant at the maximum expected profit
level of real disposable income. rate.
B. all households plan to consume at each D. upward sloping when plotted against the
possible real interest rate. real interest rate.
C. real disposable income people will earn at 47) The demand for loanable funds curve shows
each income tax bracket. that as the ________ interest rate increases,
D. all households plan to consume at each there will be ________ the curve.
level of savings. A. nominal; a rightward shift in
42) The positive slope of the consumption B. real; a rightward shift in
function indicates that: C. nominal; movement down along
A. consumers spend less out of each extra D. real; movement up along.
dollar of income. 48) An increase in the real interest rate
B. the amount of household wealth is subject ________ the quantity of loanable funds
to change. supplied and ________ the quantity of
C. when prices fall consumers spend more. loanable funds demanded.
D. consumers increase their total consumption A. increases; increases
expenditure when disposable income B. increases; decreases
increases. C. decreases; increases
43) The marginal propensity to consume is D. decreases; decreases
equal to: 49) Intermediate goods are excluded from GDP
A. what people spend out of total disposable because:
income. A. their inclusion would involve double
B. the desired amount of consumption counting.
expenditure as a proportion of disposable B. they represent goods that have never been
income. purchased so they cannot be counted.
C. the average, after-tax consumption amount. C. their inclusion would understate GDP.
D. the change in consumption expenditure D. the premise of the question is incorrect
resulting from a change in disposable income. because intermediate goods are directly
44) The aggregate expenditure curve shows: included in calculating GDP.
A. how consumption changes in response to a 50) The circular flow diagram indicates that:
change in disposable income. A. households sell the services of factors of
B. how planned aggregate expenditure and real production to firms.
GDP are related. B. firms buy the services of factors of
C. a negative relationship between the price production from the government.
level and real GDP. C. households sell goods and services to the
D. Both answers B and C are correct. government.
45) The supply of real GDP is a function of: D. firms buy goods and services from
A. the total expenditures of consumers, households.
investors and government.

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