midterm 2 practice quiz:

Question 1 (1 point) The "value added" for an individual firm is calculated as O al total revenue minun the cost of employee wages. O b) total revenue minus the cost of intermediate goods. Of the cost of employee wages and salaries plus the cost of intermediate youth. Of adding up all the costs of production for the firm. O r total revenue plan the cast of intermediate goods. Question 2 (1 point) Consider the modeling of facal policy in a simple macroeconomic model. Which of the following goverment choices would most likely be represented by an decrease in government spending, Gi O ) A reduction in spending on imported military equipment. 0) b) An increase in spending on public schools. O :] A reduction in employment insurance benefits. O d) An increase in pension payments. = An increase in the sales tax (GST or HS 1) rate. Question 3 (1 point) Consider a simple macroeconomic.. characterized by the following equations C = 300 1 0.670 1 = 300 G - 250 X = 300 I' national income were 1300, then.. al Inventories would be falling, companies would respond, and as a result, national income would fall b) Inventories would be rainy, companies would repond by increasing production, and as a result, national income would rise. cl Inventories would be falling, companies would respond, and as a result, national income would rise. O a Inventories would be unchanged, and as a result, national income is at equilibrium. Inventories would be rising, companies would respond, and as a result, national income would fall Question 4 (1 point) What is the biggest disadvantage of a barter system compared to a system that um money O Al A standardized unit of account cannot exist in a harter system. OHI Each trade requires a double coincidence of wants. 4It is difficult to find gooch to trade in a barter system that satisfy the neath of society. ( D) Commodities are difficult to use an a store of value. Of All commodities are difficult to transport and therefore inefficient for exchange Question 5 (1 point) An event such as a global pandemic causes both aggregate demand and aggregate supply to fall leading to no change in prices, but a fall in real GUP. In the context of the ALAS model, a decision to do nothing, as opposed to implementing O al Lower GDP in the long-run and higher prices. O b) Higher GDP in the long-run and lower prices. :) A fanter reduction in unemployment rates, but higher prices. O ) A slower reduction in unemployment rates, but lower prices. Question 6 (1 point) When the economy's A curve is positively doped, the multiplier in the ADD/AS model O Al constant. OHI equal bo one. O 4) larger than the simple multiplier. ( ") smaller than the simple multiplier. OF) equal to the simple multiplier. Question 7 (1 point) The Phillips ci memployment rate and the rate of change of nominal wager. When the economy shifts in a rece alonary gap, the Phillips curve would show that: al Unemployment rates are higher than normal, and wages will fall. () b) Unemployment rates are lower than normal, and wages will the. O :) Unemployment rates are higher than normal, and wages will rise. ) Unemployment rates are lower than normal, and mages will fallQuestion B (1 point) Consider the long-run theory of investment, swing, and growth. We ahserve that the interest rain has decreased, and the equilibram level of investment and savings ha increased. Which of the following would have caused this! A) An increase in business confidence. HI An increase in government spending. O C) A decrease in business confidence. DJ An increase in drained household savings. O E) A decream in potential CUP. Question 9 (1 point) Which of the following would cause the Aggregate Expenditure curve to shift down, and the Aggregate Demand curve to shift to the left? al An exogenous increase in domestic prices. O b) An increase in desired savings. O cJ A depreciation of the Canadian dollar. ) An increase in investment spending. O ) An increase in the government transfer payments. Question 10 (1 point) If all the commercial banks in the banking system collectively have $200 million in cash reserves and are satisfying their target reserve ratio of 5%, what in the amount of deposits they have! A $1500 milion HI $10 million O 4) $4000 million OH) $1000 million Question 11 (1 point) Consider the strength of monetary forces in the economy. Other things being equal, the flatter the AS curve, the A more amitie the aggregate capenature function to changes in the interest rate larger the impact on the price level from any given increase in the money supply a smaler the impact on real output from any given increase in the money supply Dza sensitive the aggregate expenditure function to changes in the interest rabin. Op waller the impact on the price level from any given increase in the money supply. Question 12 (1 point) What economists sometimes call the "long-run aggregate supply curve" in Al horirental. OHI negatively sloped 4 nonlinear. O DJ vertical OH positively sloped