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Chris M., M.S.W. Social Work

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<strong><strong><p>5. A market price climbs toward equilibrium. Which of the following is the result?</p><p> </p><p>A. New suppliers and consumers interact in the market, but get no surplus.</p><p>B. Only new suppliers, but no new consumers trade in the market.</p><p>C. New suppliers and new consumers trade in the market, but only suppliers get surplus.</p><p><strong>D. </strong><strong>New suppliers and consumers interact in the market, and both receive surplus.</strong></p><p> </p><p><strong>PLEASE NOTE: Uncertain on 5; A and C are certainly incorrect. Even though the price is higher, different consumers should behave differently; even at equilibrium price, some consumers should see consumer surplus. Thus, I lean towards D.</strong></p><p> </p><p>20. Look at the illustration in Figure A-2. Which area in the figure represents the revenue that</p><p>the government would collect if it imposed a tax?</p><p><strong>A. </strong>A <strong>C. </strong>C</p><p><strong>B. </strong>B <strong>D. </strong>D</p><p> </p><p> </p><p>18. Jean is offered a job in New York City that pays $80,000 per year and a job in Cleveland that pays $60,000 per year. The CPI for Cleveland is 100, and the CPI for New York City is 160. What is the New York City job's purchasing power in "Cleveland dollars"?</p><p> </p><p>A. $50,000</p><p> B. $60,000<strong> </strong></p><p> C. $80,000</p><p><strong>D. </strong><strong>$128,000</strong></p><p><strong>(PLEASE NOTE: Somewhat uncertain on this one; it's a strange way of demonstrating purchasing power and CPI. It stands to reason that $80,000 will purchase a lot more in a place with a lower CPI; D's the only option that's higher.)</strong></p><p>8. Which of the following factors would fundamental analysis ignore? <br/>A. Overall market trends last year <br/>B. Demand for a company's product <br/><strong>C. Government regulation of an industry</strong> <strong>(I am uncertain of this one, but it's a process of elimination; B and D are clearly wrong. I believe A is wrong as well. Please doublecheck FOR ME!)</strong> </p><p> 13. Which of the following contributes to the natural rate of unemployment? <br/>A. Government fiscal policy C. Inflation <br/>B. Recessions <strong>D. Unions</strong> <strong>(potentially A; this actually depends on your economic viewpoint. Keynsian economists would say D, while neoclassical economics says A)</strong></p><p>13. As the average price level in the economy falls, people will <br/>A. use less money as a medium of exchange. <br/>B. use more money as a medium of exchange. <br/><strong>C. want to hold more money.</strong> (<strong>Possibly B; the wording choice confuses me. What happens when price level falls is that consumers actually spend more money - it's because the purchasing power per dollar has gone up!)</strong><br/>D. use credit cards more often. </p><p>15. Assume that the reserve ratio is 20 percent and banks don't hold excess reserves. <br/>The Fed purchases $1 million of bonds from the public. What would happen next? <br/><strong>A. Bank reserves will increase by $1 million and the money supply will eventually <br/>increase by $5 million</strong>. <strong><em>(Frankly, I don't like either answer A or D; the correct answer is that bank reserves increase, but we generally think the money multiplier effect is more like tenfold, not fivefold...this increases by a larger amount than D, so it is likely their selection)</em></strong><br/>B. Bank reserves will decrease by $5 million and the money supply will eventually <br/>decrease by $5 million. <br/>C. Bank reserves will decrease by $1 million and the money supply will eventually <br/>decrease by $5 million. <br/>D. Bank reserves will increase by $1 million and the money supply will eventually <br/>increase by $2 million. </p><p> </p><p>1. An import quota causes imports to fall, the real exchange rate</p><p>to appreciate, and real interest rates to </p><p><strong>A. </strong>rise. <strong>C. </strong>remain the same.</p><p><strong>B. </strong>fall. <strong>D. </strong><strong>fluctuate</strong>.</p><p> </p><p>2. Ceteris paribus, if the Portuguese real interest rate were to</p><p>decrease, Portuguese net capital outflow would</p><p><strong>A. </strong><strong>rise.</strong></p><p><strong>B. </strong>fall.</p><p><strong>C. </strong>be unaffected.</p><p><strong>D. </strong>be impossible to predict.</p><p>3. The aggregate-supply curve is upward sloping in the short run</p><p>because of</p><p> </p><p><strong>A. </strong>shifting curves, sticky wages, and sticky prices.</p><p><strong>B. </strong>sticky wages, misperceptions, and shifting curves.</p><p><strong>C. </strong>misperceptions, sticky wages, and sticky prices.</p><p><strong>D. </strong>sticky prices, shifting curves, and misperceptions</p><p> </p><p><strong>4. What happens to the unemployment rate when a recession ends?</strong></p><p><strong>A. </strong>It stays the same. </p><p>C. It gradually falls.</p><p>B. It gradually rises.</p><p> <strong>D. </strong>It becomes zero.</p><p> </p><p><strong>18. Changes in government purchases directly affect</strong></p><p> </p><p><strong>A. </strong><strong>only aggregate demand.</strong></p><p><strong>B. </strong>only aggregate supply.</p><p>C. both aggregate demand and aggregate supply.</p><p><strong>D. </strong>neither aggregate demand nor aggregate supply</p><p> </p><p><strong>NOTE: This one is debatable, and my choice hinges on the words "directly affect." In theory, a change in government purchases could also impact aggregate supply; if the government spent more on roads, it could increase business productivity, which could increase aggregate supply. So C is a possibility, but it depends on how you interpret the question.</strong></p><p> </p><p><strong>19. The purpose of President Kennedy's tax cuts of 1964 was to</strong></p><p> </p><p><strong>A. </strong>decrease the tax burden of the poor.</p><p><strong>B. </strong>follow the advice of John Maynard Kaynes.</p><p><strong>C. </strong><strong>increase aggregate demand.</strong></p><p><strong>D. </strong>reduce inflation.</p><p>4. Financial intermediaries are <br/>A. the same as financial markets. <br/>B. financial institutions through which savers can indirectly provide funds to borrowers. <br/>C. the markets that facilitate stock and bond transactions. <br/><strong>D. financial institutions through which savers can directly provide funds to borrowers. <br/><br/>18. Look at the data table that's shown in Figure A-1. Calculate the labor-force participation <br/>rate using the table provided. <br/>ADULTS IN THE LABOR FORCE <br/>Millions <br/>Entire adult population 245 <br/>Not working 50 <br/>Unemployment 15 <br/>In labor force 210 <br/><br/>A. 35.7 percent <strong>C. 90.0 percent</strong> <strong>(Labor force participation = employed + unemployed / adult population, or 225/245 in this example; that results in 92%, not 90%, but this is closest...)</strong><br/>B. 85.7 percent D. 100.0 percent <br/><br/></strong></p></strong></strong>