Economics 102 Student Name : 2/22/2007 Section # : First Midterm TA Name : Version 1DO NOT BEGIN WORKING UNTIL THE INSTRUCTOR TELLS YOU TO DO SO.READ THESE 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 fill in your name, student ID number, number of yourdiscussion section, and version number correctly. Please answer all questions on the scantron sheetwith a #2 pencil. No cell phones, calculators, or formula sheets are allowed. PICK THE BEST ANSWER FOR EACH QUESTION. How to fill in the scantron sheet: 1. Print your last name, first name, and middle initial in the spaces marked "Last Name," "First Name," -,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" spaces ABC,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 the bubble.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 exam bookletand the issue will be addressed AFTER the examination is complete. No questions regarding the examcan 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 booklet tothe place indicated by the instructors. Discussion sections are as follows:Nonarit Bisonyabut (South)302 3:30 W 6224 SOC SCI311 8:50 F 6232 SOC SCI313 9:55 F 114 INGRAHAM315 12:05p F 122 INGRAHAM317 1:20p F 23 INGRAHAMRebecca Lessem 309 3:30p R 6232 SOC SCI319 2:25p R 4322 SOC SCIHaixi.Li301 3:30 W 6310 SOC SCI304 12:05p W 6224 SOC SCI308 2:25p W 6322 SOC SCI310 3:30p R 225 INGRAHAM Yuya Takahashi306 1:20p W 52 BASCOM307 2:25p W 4322 SOC SCI312 8:50 F 6112 SOC SCI314 9:55 F 214 INGRAHAMXiao Wang303 12:05 W 6310 SOC SCI305 1:20p W 6322 SOC SCI316 12:05p F 6232 SOC SCI318 1:20p F 4322 SOC SCIBinary Choice1. The income of Americans working abroad is greater than the income of foreigners working in the US. Therefore the GDP of the US is ___ its GNP.a. less thanb. greater than2. What do we call data on the income of 100 million households at one point in time?a. Time series datab. Cross-sectional data3. A bowed-out production possibilities frontier indicates that the opportunity cost of producing good X is _________ as resources become more heavily allocated to the production of good X.a. increasingb. decreasing4. Which of the following is a normative statement? a. Government intervention is not good for the economy.b. The average temperature in September this year was higher than last year.5. Gains from trade result when each country specializes in the production of the good which is relatively more expensive for them (in terms of opportunity cost) and then trade with each other.a. Trueb. False6. If an economy is at full employment, then the unemployment rate equals zero. a. Trueb. False 7. A recession is a less severe economic downturn than a depression.a. Trueb. False8. The opportunity cost of producing a good is the the sum of all resource costs that a producerpaid in the production process.a. Trueb. False39. Bob, an American citizen, works in France for 6 months. His income while working in France is counted as part of US GNP. a. Trueb. False10. Technological improvements that increase productivity in a country will shift the country’s production possibilities frontier outward. a. Trueb. FalseMultiple Choice Note: Graphs are not drawn to scaleUse the following table, which shows the GDP and population in a country for 2 years, to answerthe next question.Year Population Real GDP2005 80 8002006 100 1,10011. What is the growth rate of real GDP per capita in this country from 2005 to 2006 (using 2005 as the base year)?a. 1%b. 10%c. 25%d. 37.5%12. Which of the following will cause a shift in the supply curve for gas?a. The economy is doing well and everyone’s income increases. b. The price of cars falls.c. A major oil production plant is destroyed during a storm.d. A new car is sold that uses less gasoline than older models.413. Which of the following activities is included in America’s GDP? a. A woman living in New York spends a day cleaning her house. b. An American businessman opens a plant in Japan that produces computers. c. Nick volunteers at the animal rescue shelter in Washington, DC. d. An American businessman produces computers in Idaho and sells these computers to consumers in Japan.14. Which of the following events would not affect the unemployment rate?a. Jackie graduates from UW-Madison and starts a job at a bank in New York.b. Raymond finishes his service in the military and retires. c. James lost his job in November and looked for work during all of December. He is still not working, but since December he has been frustrated about not finding a new job, and he has stopped looking for a job. d. Mr. Lawrence, who ran a small company with his family, was prosecuted for tax evasion and imprisoned.Use the following information to answer the next two questions.There are 600,000 inhabitants on Badger Island. Among them, 100,000 people are under the age of 16, and 150,000 people are retired. Of the remaining people, 200,000 are employed, 50,000 are looking for a job but are not currently employed, and 100,000 are not working and are not looking for a job.15. What is the unemployment rate on Badger Island?a. 8.5%b. 10%c. 20%d. 25%16. What is the labor force participation rate on Badger Island?a. 40%b. 50%c. 62.5%d. 80%5Use the following information to answer the next two questionsSouth and Ning each produce 2 goods: bread and milk. They both work 16 hours a day. It takes Ning 2 hours to produce a loaf of bread, and it takes her 2 hours to produce a gallon of milk. It takes South 1 hour to produce a loaf of bread, and it takes him 4 hours to produce a gallon of milk. Both Ning and South have constant opportunity costs of producing a gallon of
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