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Econ 102: Test 1: 20th August 2013
School of Accountancy, Economics and Finance
ECONOMICS 102
TEST 1: Tuesday 20th August 2013
DURATION: 45 minutes
TOTAL MARKS: 100
INSTRUCTIONS:
1
...
Choose the most correct answer
3
...
(Entries
in pen will not be recorded by the scanner and marks will thus be lost)
...
You are required to answer as many of the questions as you can in the time available
...
A correct answer earns 5 marks, whilst an incorrect answer earns a negative mark of (-1)
...
Please ensure that your student number and seat number are correctly entered in the spaces provided
on the MCQ answer sheet
...
Page 1 of 8
Econ 102: Test 1: 20th August 2013
School of Accountancy, Economics and Finance
MULTIPLE CHOICE
...
1) During the1970s and 1980s the main global economic problems of concern to
the world's policymakers were ________ inflation, ________ economic growth,
and _________ unemployment
...
B) business-cycle changes in total output
...
D) long-run expansion of an economy's production possibilities
...
3) Potential GDP is
A) the value of production when all the nation's labour, land, capital, and
entrepreneurial ability are fully employed
...
C) the level of GDP achieved during periods when 100 per cent of the labour
force is employed
...
E) always greater than real GDP
...
6 per cent to 8
...
During the
same time the growth rate of real gross domestic product has become
negative
...
B) a peak in the business cycle will soon be reached
...
D) a recession is occurring in this economy
...
Page 2 of 8
Econ 102: Test 1: 20th August 2013
School of Accountancy, Economics and Finance
5) In the above figure, which point represents the overuse of resources, and an
economy at the peak of a business cycle?
A) Point K
...
C) Point I
...
E) Point H
6) Which of the following could be one of the costs of more rapid growth in GDP?
A) More money is available for research and development
...
C) People must give up some current consumption
...
E) Per capita incomes will remain static and living standards fall
...
A) the United States has had
B) Japan has had
C) Japan and the European Union have had
D) South Africa has had
E) Saudi Arabia has had
Page 3 of 8
Econ 102: Test 1: 20th August 2013
School of Accountancy, Economics and Finance
8) If the economic activity rate is rising and the working-age population is not
changing, then the
A) number of unemployed people is falling and the size of the workforce is
rising
...
C) size of the workforce is rising
...
E) number of women participating in the workforce is probably falling
...
B) Discouraged workers leave the workforce
...
D) A large increase in cheap Chinese imports that puts many clothing and
textile firms out of business
...
Period
1
2
3
4
5
6
Price level
100
117
125
120
130
150
Inflation rate
(per cent)
A
B
C
D
E
10) In the table above, what inflation rate in period 3 is represented by the letter B?
A) 6
...
B) 8
...
C) 17
...
D) -4
...
E) 8
...
Page 4 of 8
Econ 102: Test 1: 20th August 2013
School of Accountancy, Economics and Finance
11) Inflation is a problem when it
A) diverts resources from productive uses
...
C) causes income to be redistributed between lenders and borrowers
...
12) If government revenue (of $200 billion) less government spending (of $300
billion) stays the same between one year and the next, while its GDP
increases, then
A) the ratio of the budget deficit to GDP increases
...
C) the ratio of the budget deficit to GDP decreases
...
E) the ratio provides no useful information to policy-makers
...
B) is a net recipient of interest payments
...
D) borrows from the rest of the world
...
14) The largest component of national income is
A) income from self-employment
...
C) payment of interest to capital
...
E) compensation for employees
Page 5 of 8
Econ 102: Test 1: 20th August 2013
School of Accountancy, Economics and Finance
15) Suppose an economy has some inflation during 2012
...
B) be greater than nominal GDP
...
D) not be different from nominal GDP
...
16) Because pollution reduces economic welfare, real GDP
A) decreases as pollution increases
...
C) increases to take into account the expenditures that will be made in the
future to clean up the pollution
...
E) is no longer a useful measure of economic welfare
...
B) Prenushka, who is working 12 hours a week but wants a full-time job
...
D) Lesley, who just quit her job to return full-time to higher education
...
18) When an economy switches production toward services and away from
manufacturing, and some workers in its manufacturing industries are
permanently laid off then,
A) structural unemployment increases
...
C) cyclical unemployment increases
...
E) all types of unemployment increase
...
B) Country B
...
D) Both Countries A and B have identical fractions
...
20) Lifetime income is distributed
A) more equally than annual income and less equally than measured wealth
...
C) less equally than annual income and less equally than measured wealth
...
E) equally with measured wealth, because wealth distributions are the same as
income distributions
...
C
2
...
A
4
...
C
7
...
C
9
...
A
11
...
C
13
...
E
15
...
B
17
...
A
19
...
D
Page 8 of 8
Test 2: 21st September 2011