ECO403 Macroeconomics Quiz No. 2 Solution and Discussion Fall 2014



Question # 1 of 20 ( Start time: 01:12:03 AM ) Total Marks: 1
Which of the following is NOT included in M1?
Select correct option:
Deposits in checking accounts that pay interest
Deposits in checking accounts
Deposits in money market mutual funds
Currency held by the public

Question # 2 of 20 ( Start time: 01:12:37 AM ) Total Marks: 1
Different firms change their---------at different times; this leads to----------.
Select correct option:
Prices; Menu cost of inflation.
Weight; Shoe leather cost of inflation.
Packing; General inconvenience.
prices; Relative price distortions.

Question # 3 of 20 ( Start time: 01:14:06 AM ) Total Marks: 1
If nominal GDP = 4700 while real GDP = 1500 then GDP deflator is equal to;
Select correct option:
(1500/4700) * 100
(4700 + 1500) * 100
(4700-1500) * 100
(4700/1500) * 100

Question # 4 of 20 ( Start time: 01:15:34 AM ) Total Marks: 1
Suppose the first five units of labor inputs generate corresponding total outputs of 100, 130, 150, 160 and 170. The marginal product of the second unit of labor is:
Select correct option:
230
150
130
30

Question # 5 of 20 ( Start time: 01:17:03 AM ) Total Marks: 1
The Phillips Curve illustrates the short run tradeoff between:
Select correct option:
Inflation and unemployment.
Inflation and employment.
Inflation and price level.
Inflation and price index.

Question # 6 of 20 ( Start time: 01:18:29 AM ) Total Marks: 1
When money is used to express the value of goods and services, this function of money is called--------
Select correct option:
Unit of account.
Store of purchasing power.
Store of value.
Medium of exchange.

Question # 7 of 20 ( Start time: 01:19:26 AM ) Total Marks: 1
In a given year, a country's exports total Rs25 million & imports are Rs27 million. Its net exports are:
Select correct option:
Rs.52 million.
Rs. 25 million.
Rs. - 2 million.
Rs. + 2 million.

Question # 8 of 20 ( Start time: 01:20:45 AM ) Total Marks: 1
If you buy a pizza from a restaurant rather than making the identical product at home, then which of the following would happen?
Select correct option:
GDP increases.
GDP decreases.
GDP remains unchanged.
Society’s well-being decreases.

Question # 9 of 20 ( Start time: 01:21:18 AM ) Total Marks: 1
The study of the aggregate economy is known as:
Select correct option:
Microeconomics.
Macroeconomics.
Financial economics.
Development economics.

Question # 10 of 20 ( Start time: 01:22:32 AM ) Total Marks: 1
Economy faces a short run tradeoff between inflation and _________:
Select correct option:
Employment.
Unemployment.
Price level.
None of given options.

Question # 11 of 20 ( Start time: 01:23:48 AM ) Total Marks: 1
Use the following table to answer question Worker 1 2 3 4 Output 100 107 110 113 What is the marginal product of the second worker?
Select correct option:
03
07
107
207

Question # 12 of 20 ( Start time: 01:25:17 AM ) Total Marks: 1
If the nominal interest rate is 7 percent & the inflation rate is 4 percent, the real interest rate is-----------------percent.
Select correct option:
3
11
28
110

Question # 13 of 20 ( Start time: 01:26:14 AM ) Total Marks: 1
The ---------refers to the separation of ------and ----------- variables.
Select correct option:
Classical dichotomy; real; nominal
Keynes dichotomy; dependent; independent
Classical dichotomy; exogenous; endogenous
Classical dichotomy; real wages; real

Question # 14 of 20 ( Start time: 01:27:45 AM ) Total Marks: 1
A carpenter buys wood for Rs.500 and paint for Rs.200 and uses them to produce table for consumers of worth Rs.700, the contribution to Gross Domestic Product (GDP) is:
Select correct option:
Rs.300
Rs.500
Rs.700
Rs.1400

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Question # 15 of 20 ( Start time: 01:29:16 AM ) Total Marks: 1
The GDP deflator can be used:
Select correct option:
To reduce the overstatement of economic activity that would occur if we included intermediate production.
To correct nominal GDP for the contribution to domestic GDP made by foreign owned factors of production.
To decompose a change in nominal GDP into a change in real GDP and an average change in prices.
To obtain the factor income flows that result from the economic activity that has produced the GDP.

Question # 16 of 20 ( Start time: 01:30:06 AM ) Total Marks: 1
The relative price of domestic ------- in terms of foreign --------- is known as nominal exchange rate.
Select correct option:
Goods; goods
Goods; currency
Currency; currency
Currency; goods

Question # 17 of 20 ( Start time: 01:31:32 AM ) Total Marks: 1
Gross Domestic product is sum of the market value of the:
Select correct option:
Intermediate goods.
Intermediate goods & used goods.
Intermediate goods & final goods.
Final goods and services.

Question # 18 of 20 ( Start time: 01:32:53 AM ) Total Marks: 1
If nominal exchange rate is Rs.20 and price ratio is Rs.30. What would be the real exchange rate?
Select correct option:
20+30.
20-30.
20*30.
20/30.

Question # 19 of 20 ( Start time: 01:34:06 AM ) Total Marks: 1
If an economy has population of 15 million people out of which 2 million are unemployed and 7 million are employed. What is rate of unemployment?
Select correct option:
(2/17)*100
(2/09)*100
(7/09)*100
(2/7)*100

Question # 20 of 20 ( Start time: 01:35:09 AM ) Total Marks: 1
------------- illustrates the short run trade-off between inflation and unemployment.
Select correct option:
Phillips curve
Consumption curve
Demand curve
Investment curve