ECO2013 QUIZ V W2004 version2 sol

Topics: Unemployment, NAIRU, Inflation Pages: 13 (2126 words) Published: December 13, 2014
NAME: _________________________________

Student ID: __________________________

College of Business Administration
Department of Economics
Principles of Macroeconomics
O. Mikhail
ECO 2013 - 0008
Spring 2004

QUIZ V – Version 2







This closed book QUIZ is worth 100 points.
The exam totals 45 Multiple-Choice questions.
Each Multiple-Choice question is worth 2.22 points.
Allocate your time accordingly.
Including the cover page, the exam totals 10 pages.
DO NOT forget to write your name and your student id on the exam booklet. Non-Programmable calculators and language dictionaries are allowed. At the end of the exam, hand-in the exam booklet and the computer sheet to the examiner.

April 14, 2004
4:35 p.m. – 5:40 p.m.
BA 2-210

ECO 2013 – Section 0008 – QUIZ IV – Version 1
O. Mikhail – http://www.bus.ucf.edu/omikhail

Multiple-Choice Questions (100 points)
Use the following to answer questions 1-2:

PAE
PAE=500+.9Y

1. Based on the Keynesian cross diagram, at short-run equilibrium output autonomous expenditure equals _____ and induced expenditure equals ______. a) 500, 5000 b) 500, 5900 c) 5450, 5500 d) 5900, 6000 e) 500, 4500 2. Based on the Keynesian cross diagram, if output equals 4,000 planned aggregate expenditure is _____ output and firms will ____ production.

a) less than; decrease
d) greater than; increase
b) less than; increase
e) equal to; not change
c) greater than; decrease
3. In the long run, total spending only influences:
a) potential output.
d) actual output.
b) productive capacity.
e) labor supply and demand.
c) inflation.

Page 2 of 10

ECO 2013 – Section 0008 – QUIZ IV – Version 1
O. Mikhail – http://www.bus.ucf.edu/omikhail

4. A recession occurs when either _____ and/or _______.
a) potential output grows slowly; actual output rises above potential output b) potential output grows rapidly; actual output rises above potential output. c) potential output grows rapidly; actual output falls below potential output d) potential output grows slowly; actual output falls below potential output e) potential output grows rapidly; actual output equals potential output 5. If the frictional rate of unemployment equals 3 percent, the structural rate of unemployment equals 4 percent, and the cyclical rate of unemployment equals 2 percent, then the natural rate of unemployment equals:

a) 9%. b) 6%. c) 0%. d) 5%. e) 7%.
6. The practice of spreading one's wealth over a variety of different financial investments in order to reduce overall risk is called:
a) risk reservation.
d) diversification.
b) allocation.
e) following the risk premium.
c) the credit crunch.
7. In Macroland potential output equals $100 billion and the natural rate of unemployment is 5 percent. If the actual unemployment rate is 3 percent, then the output gap equals: a) $2 billion. b) $4 billion. c) -$4 billion. d) -$2 billion. e) -$1 billion. 8. If planned aggregate expenditure (PAE) in an economy equals 2,000 + .8Y and potential output (Y*) equals 11,000, then this economy has:

a) no autonomous expenditure.
d) no output gap.
b) no induced expenditure.
e) an expansionary gap.
c) a recessionary gap.
9. A fiscal policy action to close an expansionary gap is to: a) increase the marginal propensity to consume.
b) increase government purchases.
c) increase taxes.
d) increase potential output.
e) increase transfer payments.

Page 3 of 10

ECO 2013 – Section 0008 – QUIZ IV – Version 1
O. Mikhail – http://www.bus.ucf.edu/omikhail

10. In the Keynesian model, a $1 billion decrease in autonomous consumption leads to ______ in short-run equilibrium output.
a) no change
d) more than a $1 billion decrease
b) a $1 billion decrease
e) a $1billion increase
c) a greater than $1 billion increase
11. All of the following would be included in planned aggregate expenditure EXCEPT: a) social security payments.
b) purchases of services provided by government employees.
c)...
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