Année universitaire 2012/2013 Sup de Co La Rochelle Semestre de printemps Yannick LUCOTTE

Introduction to Economics Intermediate Exam: Multiple Choice Quiz April 15, 2013 (40 minutes)

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Circle the true answer. Only one possible answer by question. Right answer: + 1 point 1) A country with a trade surplus is one for which: (a) The manufacturing sector is declining (b) Foreigners refuse to accept its currency (c) Exports exceed imports (d) Imports exceed exports 2) If the price of a good falls, there is a __________ the supply curve: (a) Rightward shift of (b) Leftward shift of (c) Movement up along (d) Movement down along 3) The yield curve shows the relationship between __________ and __________: (a) Interest rate; tax rate (b) Interest rate; inflation rate (c) Liquidity; interest rate (d) Maturity; interest rate 4) Suppose that the euro/dollar exchange rate evolves from 1 euro= 0,70$ to 1 euro = 0,90$. Therefore, ceteris paribus, the prices of American goods sold in France will: (a) Increase (b) Decrease (c) Not change (d) Will either increase or decrease

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5) A deflation occurs when: (a) Stock prices fall (b) The prices of most goods and services increase (c) Stock prices rise (d) The prices of most goods and services fall 6) Economics is a social science that studies the choices that individuals, businesses, governments, and entire societies make in the presence of: (a) Efficiency (b) Poverty (c) Scarcity (d) Necessity 7) As the consumption of goods and services increases, total utility __________ and marginal utility __________: (a) Decreases; decreases (b) Decreases; increases (c) Increases, increases (d) Increases; decreases 8) The desire to have a relatively smooth pattern of consumption over time is known as the: (a) Ricardian equivalence (b) Marginal propensity to consume (c) Substitution effect (d) Permanent income theory 9) In the market for chocolate cookies, an increase in demand will result in: (a) A decrease in price and an increase in quantity (b) An increase in price and a decrease in quantity (c) A decrease in both price and quantity (d) A increase in both price and quantity 10) An increase in the real wage would result in a: (a) Shift of the labor demand curve, causing a decrease in the number of workers hired by firms (b) Shift of the labor demand curve, causing an increase in the number of workers hired by firms (c) Movement along the labor demand curve, causing a decrease in the number of workers hired by firms (d) Movement along the labor demand curve, causing an increase in the number of workers hired by firms 11) The price elasticity of demand measures the responsiveness of the: (a) Price to a change in the quantity demanded of a good (b) Price to a change in the quantity supplied of a good (c) Quantity demanded to a change in the price of a good (d) Quantity supplied to a change in the price of a good

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12) The budget deficit will exceed the primary budget deficit in a given fiscal year if: (a) The rate of inflation exceeds zero (b) The economy is in a recession (c) Government spending exceeds tax revenue (d) Net interest payments on outstanding debt are positive 13) A graphical representation between two variables that move in the same direction is called a __________ relationship: (a) Inverse (b) Linear (c) Positive (d) Negative 14) Taxes that are used by government as an incentive for producers to cut back an activity that creates an external cost are: (a) Subsidies (b) Ricardian taxes (c) Pigouvian taxes (d) Keynesian taxes (e) None of the above 15) What is the unemployment rate if there are 125 million people in the labor force, 100 million people employed and 25 million not in the labor force? (a) 15% (b) 25% (c) 20% (d) 17% (e) None of the above 16) As the quantity consumed of goods and services increases, marginal __________: (a) Benefit decreases (b) Benefit increases (c) Benefit does not change (d) Cost increases (e) Cost decreases 17) In a fixed exchange-rate regime, a decline in the value of a currency would be called __________ of this currency: (a) A revaluation (b) An appreciation (c) A depreciation (d) A devaluation 18) In a closed economy, GDP equals: (a) Consumption + Investment (b) Consumption + Investment + Public expenditure (c) Consumption + Investment + Public expenditure + Exports - Imports (d) Consumption + Public expenditure

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19) Factors that influence the elasticity of demand include all the following, except: (a) Closeness of substitutes (b) The elasticity of supply (c) Proportion of income spent on the good (d) None of the above 20) The real interest rate is equal to: (a) Nominal interest divided by inflation rate (b) Nominal interest rate plus inflation rate (c) Nominal interest rate minus inflation rate (d) Nominal interest rate multiplied by inflation rate

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