Economics 102 Student Name : _______ April 12, 2010 Section # : _______ Second Midterm TA Name : ______ Student ID # : ______ Version 1DO NOT BEGIN WORKING UNTIL THE INSTRUCTOR TELLS YOU TO DO SO. READTHESE INSTRUCTIONS FIRST.You have 50 minutes to complete the exam. The exam consists of 10 binary choice and 20 multiplechoice questions. Each binary choice question is worth 2 points and each multiple choice question isworth 4 points for a total of 100 points. Please answer all questions on the scantron sheet with a #2pencil. NO CELL PHONES, CALCULATORS, OR FORMULA SHEETS ARE ALLOWED.PICK THE BEST ANSWER FOR EACH QUESTION.How to fill in the scantron sheet and other information: 1. Print your last name, first name, and middle initial in the spaces marked "Last Name," "FirstName," and "MI." Fill in the corresponding bubbles below. 2. Print your student ID number in the space marked "Identification Number." Fill in the bubbles. 3. Write the number of the discussion section you’ve been attending under "Special Codes" spacesABC, and fill in the bubbles. You can find the discussion numbers below on this page. 4. Write the version number of your exam booklet under "Special Codes" space D, and fill in thebubble. The version number is on the top of this page. 5. If there is an error on the exam or you do not understand something, make a note on your exambooklet and the issue will be addressed AFTER the examination is complete. No questionsregarding the exam can be addressed while the exam is being administered. 6. When you are finished, please get up quietly and bring your scantron sheet and this exam bookletto the place indicated by the instructors. Discussion sections are as follows:Han.HanPedro.Hancevic Haixi.Li George . Loginov3 53 2:25PM W SS6322 355 9:55AM F ING 122 350 3:30PM W SS5322351 3:30PM M SS6314356 9:55AM F 214 ING 358 12:05PM F BASCOM 58361 1:20PM F IMGRAHAM 23352 2:25PM M SS6314 359 12:05PM F SS 5231 362 1:20PM F BASCOM 55354 8:50AM F Bascom 551Work SheetI, __________________________________, agree to neither give nor receive any help on this exam from other students. Furthermore, I understand that use of a calculator is an academic misconduct violation on this exam.Signed ____________________________________Binary Choice (2 points for each question)1. Real GDP and real GDP per capita always have different growth rates.a. trueb. false2. Credit lenders are better off if all inflation is anticipated.a. trueb. false3. If National Savings equals $120 billion and Investment is $ 140 billion, then Capital Inflow is positive. a. trueb. false4. The minimum wage is a price floor in the labor market. If the minimum wage is abovethe equilibrium wage, thena. the employment level increases.b. the unemployment level increases.5. Country A’s production function is given by 0.5 0.52y L K= while country B’s production function is given by 2 0.5Y L K= +. Suppose both countries have the same endowment oflabor, L=16, and the same endowment of capital, K=100. Then, country A’s labor productivity is bigger than country B’s labor productivity when we have full employment.a. trueb. false 6. Consider an open economy. In this economy net exports equal zero and the government iscurrently operating with a budget deficit. In this scenario, investment is less than privatesavings. a. trueb. false7. The nominal GDP growth rate from 2006 to 2007 in South Africa was 3%, so the real output (quantity of goods) produced in 2007 was larger than in 2006.a. trueb. false8. The GDP deflator is designed to adjust nominal GDP for changes in the quality of goodsover time. a. trueb. false9. A price index like the CPI, which uses a fixed basket of goods from one year to the next,will tend to overstate inflation becausea. consumers will usually reduce their consumption of goods when they becomerelatively cheaper.b. consumers will tend to substitute away from goods that become more expensive.10. The type of unemployment caused by changes in the business cycle is naturalunemployment.a. trueb. falseMultiple Choice (4 points for each question)11. Rob is considered unemployed if hea. has looked for a job in the last four weeks but has not found a job.b. has worked at least 1 hour but not more than 15 hours as a paid employee lastweek.c. does not have a job and stopped looking for a job at least two months ago.d. has a part-time job but would like a full-time job.12. A farm began the year with 1,000 pounds of milk in inventory, produced 10,000 poundsof milk during the year and ended the year with 1,100 pounds of milk in inventory. The100 pounds added to his inventory will be classified asa. consumption expenditures.b. investment.c. net exports of goods and services.d. capital inflow.13. In year 2005, US consumers spent $10 billion, interest payments were $1.5 billion, thegovernment purchased $3 billion, net exports amounted to $2 billion, and investment was$8 billion. Hence the US 2005 GDP wasa. $21.5 billion.b. $24.5 billion.c. $23 billion.d. $19.5 billion.14. The Labor Force of Ithaca in 1325 BC consisted of 1200 people. The unemployment rate before the recession of 1325 BC was 25%, during the recession 400 employees were firedand half of them became discouraged workers. What was the after-recession unemployment rate in Ithaca? a. 33%b. 40%c. 50%d. 60%;15. In 2007 country A experienced an improvement in its technology. At the same time 1000lawyers that were employed in country B migrated to country A. Given this informationand holding everything else constant, the effect of these changes on the aggregateeconomy of country A will bea. an increase in labor productivity and a decrease in aggregate production.b. an increase in labor productivity and an increase in aggregate production.c. an increase in aggregate production and an indeterminate impact on laborproductivity.d. an increase in labor productivity and an indeterminate impact on aggregateproduction.16. Consider a country with a closed economy. Suppose the government then decides toincrease its spending. Holding everything else constant, which of the followingstatements is NOT true given this increase in government spending?a. The equilibrium interest rate will be higher.b. Private saving will decrease.c. The equilibrium level of
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