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EXAM#$2$

IMPORTANT! Please, read BEFORE you take the test. This is a TIMED test covering lectures#$6-$#$11.$ You will have $50$ mins to complete $30$ multiple$-$choice questions. Make sure that you are NOT interrupted during those $50$ mins as once you start taking the test, the clock will start ticking and you will not be able to pause it$.$ Even though it is technically an open$-$book test, you will NOT have time to look through the notes, slides, or videos trying to find the answers to the exam questions. If you attempt to do so$,$ you may run out of time and will not be able to finish the test. Finally, even though this test is not monitored, each student is supposed to take the test independently. Any suspected acts of academic dishonesty will be reported immediately to the Dean of Students office and consequences will follow $($including but not limited to$,$ a student receiving a zero on the test$).$ GOOD LUCK on the exam!

Question $1$

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If real GDP per capita in Ukraine is $$8,000,$ what will real GDP per capita in Ukraine be after $5$ years if real GDP per capita grows at an annual rate of $3\mathrm{.}2\%?$

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a

$$8,520.$

b

$$9,280.$

c

$$9,365.$

d

$$10,560.$

SavedSaved Question $1$

Question $2$

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If the CPI was $255\mathrm{.}5$ in April of $2020$ and $131$ in April of $1990,$ what was the average inflation rate over this $30-$year period?

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a

$2\mathrm{.}3\%.$

b

$3\mathrm{.}2\%.$

c

$15\%.$

d

$95\%$

SavedSaved Question $2$

Question $3$

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If the money in your saving account increases from $$15,000$ to $$30,000$ in $4$ years, what is the average interest rate that your bank is paying on saving accounts?

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a

$4\%.$

b

$12\mathrm{.}25\%$

c

$17\mathrm{.}5\%.$

d

$28\%.$

SavedSaved Question $3$

Question $4$

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Consider the following data for a closed economy:

Y $=$ $$14$ trillion

C $=$ $$9$ trillion

I$=$ $$2$ trillion

TR $=$ $$1$ trillion

T $=$ $$5$ trillion

Based on the information above, what is the level of public saving, Spub, in the economy?

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a

$$1$ trillion.

b

$$2$ trillion.

c

$$3$ trillion.

d

$$5$ trillion.

e

not enough information to determine.

SavedSaved Question $4$

Question $5$

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Which of the following is consistent with the graph depicted below?

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a

An expected recession decreases the profitability of new investment.

b

Technological change increases the profitability of new investment.

c

The government runs a budget deficit.

d

Consumers become more frugal as they expect the recession to be very severe.

SavedSaved Question $5$

Question $6$

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Which factors explain labor productivity?

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a

diminishing returns; the quantity of capital per hour worked.

b

diminishing returns; the quantity of labor per hour worked.

c

technological change; the quantity of capital per hour worked.

d

technological change; the quantity of labor per hour worked.

SavedSaved Question $6$

Question $7$

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Suppose when L$=50$ and K$=100,$ output Y$=$$$1,000.$ How much will Ynew be if this company cuts both inputs of production in half, i$.$e$.,$ Lnew$=25$ and Knew$=50,$ as a result of the ongoing recession? Assume that this production function exhibits constant returns to scale.

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a

Ynew$=$$$1,000.$

b

Ynew$=$$$975.$

c

Ynew$=$$$500.$

d

Ynew$=$$$2,000.$

SavedSaved Question $7$

Question $8$

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If in a small economy both real GDP and labor grow by $6\%,$ technological progress is $1\%,$ by

how much capital must have increased in this economy?

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a

$6\%.$

b

$3\%.$

c

$2\%.$

d

$1\%.$

SavedSaved Question $8$

Question $9$

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Consider two countries, Alpha and Beta. In Alpha, real GDP per capita is $$5,000.$ In Beta, real

GDP per capita is $$2,000.$ Based on the theory of "global convergence", what would you

predict about the growth rates in real GDP per capita across these two countries?

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a

The growth rate of real GDP per capita in Alpha and Beta should be the same.

b

The growth rate of real GDP per capita should be higher in Alpha than in Beta.

c

The growth rate of real GDP per capita should be lower in Alpha than in Beta.

d

The theory of "global convergence" makes no predictions regarding differences in growth rates of real GDP per capita across the two countries.

SavedSaved Question $9$

Question $10$

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Suppose technological progress is $2\%.$ If labor productivity increased by $4\%$ this year, by how much must have the capital$-$to$-$labor ratio grown?

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a

$1\%.$

b

$2\%.$

c

$4\%.$

d

$6\%.$

SavedSaved Question $10$

Question $11$

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Investment spending, I, will increase

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a

firms become more pessimistic about earning future profits.

b

the corporate income tax decreases.

c

business cash flow decreases.

d

the interest rate rises.

SavedSaved Question $11$

Question $12$

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If the U$.$S$.$ dollar appreciates against the euro from $0\mathrm{.}8$ euro$/$U$.$S$.$ $ to $0\mathrm{.}95$ euro$/$U$.$S$.$ $$,$

what will happen to net exports, NX$?$

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a

net exports will increase, because exports to the EU will increase.

b

net exports will decrease, because exports to the EU will increase.

c

net exports will decrease, because imports from the EU will decrease.

d

net exports will decrease, because exports to the EU will decrease