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Ag Econ 1042: Exam 1 - Economics Questions - Prof. Jan Dauve, Exams of Macroeconomics

The questions and answers for the first exam of ag econ 1042, an introductory economics course. The exam covers topics such as economic growth, productivity, opportunity cost, demand, supply, and international trade. Students are expected to answer true/false and multiple choice questions, as well as provide short answers for some questions.

Typology: Exams

2009/2010

Uploaded on 05/09/2010

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Ag Econ 1042 Name _______________________________
First Exam, 130 points 11 a.m. Section
February 18, 2010
True/False – one point each
1. Economic growth tends to make people worse off.
2. An increase in output per person is the same as an increase in productivity.
3. A production possibilities curve or frontier represents the combination of goods
that could be produced.
4. Opportunity cost is what we pay for a good minus any coupons or rebates.
5. Demand is a schedule of quantities the consumers will choose at various prices.
6. An increase in technology will shift out the production possibilities curve by
increasing the productivity of resources.
7. Ben Bernanke holds a powerful economic position but Dauve likely possesses a
comparative advantage in the teaching of Ag Econ 1042.
8. The key to possessing a comparative advantage is a higher opportunity cost.
9. Productivity gains can help prevent inflation.
10. Consumer prices rose approximately 7.0% in 2009.
11. Unemployment tends to fall in the U.S. when profits and income are rising.
12. An increase in the demand for fast food will shift the supply curve to the left.
13. Regions trade products to save resources, gain income and make the traders
better off.
14. Regulations affecting the construction or operation of oil refining facilities will
reduce domestic supply.
15. An increase in the demand for the output of the computer industry will cause an
increase in their demand for labor.
16. Net job losses continue a year long decline.
17. The government currently pays about 50% of U.S. health care costs.
18. The U.S. debt has increased annually for 30 years with only a few exceptions at
the end of the 20th century.
19. Improvements in agricultural technology, which lead to increased agricultural
production, result in lower cash receipts for farmers if demand is inelastic.
20. An increase in the demand for soybeans in the European Union would likely
result in increases in exports of U.S. produced soybeans.
21. The U.S. deficit is expected to hit an all time high before it drops.
22. The FED is mildly optimistic about U.S. economic growth.
23. Excess supply is potential output that is realized at higher prices.
24. Trade, while good for sellers, is rarely beneficial for buyers.
25. An equilibrium price is also called a market-clearing price because that is the
one price where buyers and sellers agree on the quantity to exchange.
26. The goal of a business is to produce a good at the lowest cost possible.
27. A flood that removes land from production would reduce the demand for grain.
28. Opportunity cost refers to the monetary cost of an activity.
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Ag Econ 1042 Name _______________________________ First Exam, 130 points 11 a.m. Section February 18, 2010 True/False – one point each

  1. Economic growth tends to make people worse off.
  2. An increase in output per person is the same as an increase in productivity.
  3. A production possibilities curve or frontier represents the combination of goods that could be produced.
  4. Opportunity cost is what we pay for a good minus any coupons or rebates.
  5. Demand is a schedule of quantities the consumers will choose at various prices.
  6. An increase in technology will shift out the production possibilities curve by increasing the productivity of resources.
  7. Ben Bernanke holds a powerful economic position but Dauve likely possesses a comparative advantage in the teaching of Ag Econ 1042.
  8. The key to possessing a comparative advantage is a higher opportunity cost.
  9. Productivity gains can help prevent inflation.
  10. Consumer prices rose approximately 7.0% in 2009.
  11. Unemployment tends to fall in the U.S. when profits and income are rising.
  12. An increase in the demand for fast food will shift the supply curve to the left.
  13. Regions trade products to save resources, gain income and make the traders better off.
  14. Regulations affecting the construction or operation of oil refining facilities will reduce domestic supply.
  15. An increase in the demand for the output of the computer industry will cause an increase in their demand for labor.
  16. Net job losses continue a year long decline.
  17. The government currently pays about 50% of U.S. health care costs.
  18. The U.S. debt has increased annually for 30 years with only a few exceptions at the end of the 20th^ century.
  19. Improvements in agricultural technology, which lead to increased agricultural production, result in lower cash receipts for farmers if demand is inelastic.
  20. An increase in the demand for soybeans in the European Union would likely result in increases in exports of U.S. produced soybeans.
  21. The U.S. deficit is expected to hit an all time high before it drops.
  22. The FED is mildly optimistic about U.S. economic growth.
  23. Excess supply is potential output that is realized at higher prices.
  24. Trade, while good for sellers, is rarely beneficial for buyers.
  25. An equilibrium price is also called a market-clearing price because that is the one price where buyers and sellers agree on the quantity to exchange.
  26. The goal of a business is to produce a good at the lowest cost possible.
  27. A flood that removes land from production would reduce the demand for grain.
  28. Opportunity cost refers to the monetary cost of an activity.

Multiple choice – two points each _____ 29. The inevitable cost of protecting domestic industries from foreign competition is a) lower prices for foreign consumers b) higher prices for domestic consumers c) higher prices for domestic sellers d) all of the above _____ 30. According to the principle of comparative advantage, worldwide output and consumption levels are highest when goods are produced where a) opportunity costs are lowest b) inflation rates are low c) wages are lowest d) GDP is falling _____ 31. The Chairman of the Board of the Federal Reserve System is currently a) Joe Biden b) John Maynard Keynes c) Paul Volcker d) Alan Greenspan e) Ben Bernanke _____ 32. Ceteris paribus means a) to each according to his need b) something for something in return; payback c) production is the source of wealth d) others things being equal _____ 33. A recession results in a sharp decrease in consumers’ disposable income. Automobiles are a normal good. Other things being equal, it is likely that a) the quantity of automobiles demanded will stay the same b) the demand for automobiles will increase c) the quantity of automobiles demanded will increase d) the demand for automobiles will decrease e) all of the above _____ 34. The demand is said to be ____________________ when the quantity is very responsive to changes in price. a) independent b) inelastic c) elastic d) flexible

  1. What are the four components of AD? a) largest ________________________ b) related to AS _______________________ c) smallest ________________________ d) on taxes and borrowing _______________________
  2. What happens to the demand for pizza if Pizza Hut lowers its prices?
  3. Show with a diagram why grain prices rise when there is widespread flooding.
  4. Why is the number of job losses decreasing in the U.S.?
  5. Draw a price ceiling scenario and show the deadweight loss.
  1. What do we call the total market value of all final goods produced legally within a country?
  2. Draw the importing market only and show the impact of a tariff that is imposed on a country that is trading freely.
  3. Draw what happens in the labor market when the government established a minimum wage. Show final consumer and producer surplus and the deadweight loss.
  1. Draw a production possibilities curve and a) Show a level of production that implies under utilization of available technology. b) Show a point where all resources and technology are used efficiently. c) Show the result of acquiring or developing more resources or better technology. Be sure to label everything clearly.