ECON 362 FINAL EXAM MULTIPLE CHOICE REVIEW EXAM QUESTIONS
AND ANSWERS
In the Solow model, if investment exceeds depreciation the capital stock will ______, and output will
________ until the steady state is attained - CORRECT ANSWER✅✅increase, increase
If the number of employed workers equals 200 million and the number of unemployed workers equals
20 million, the unemployment rate equals ______ percent (rounded to nearest percent) - CORRECT
ANSWER✅✅9% (20mil/220mil)
If wage rigidity holds the real wage above equilibrium level, an increase in the supply of labor will
_______ the number employed - CORRECT ANSWER✅✅Increase
If the real return on government bonds is 3 percent and the expected rate of inflation is 4 percent, then
the cost of holding money is _____ percent - CORRECT ANSWER✅✅7%
The fact that the Soviet Union's input was the same as the US, but produced only 1/3 of the US GDP
highlights the importance of which factor in growth? - CORRECT ANSWER✅✅Efficiency
Which of the following is an example of frictional unemployment? - CORRECT ANSWER✅✅Dave
searches for a new job after voluntarily moving to San Diego.
In the Solow growth model with population growth, but no technological change, a higher level of
steady-state output per worker can be obtained by all of the following except:
A) Increasing the saving rate
B) decreasing the depreciation rate
C) increasing the population growth rate
D) increasing the capital per worker ratio - CORRECT ANSWER✅✅C) Increasing the population growth
rate.
All of the following are causes of structural unemployment except:
A)Minimum-wage laws
, B)the monopoly power of unions
C) unemployment insurance
D) Efficiency wages - CORRECT ANSWER✅✅C) Unemployment Insurance
If the Fed announces that it will raise the money supply in the future but does not change the money
supply today, - CORRECT ANSWER✅✅Both the nominal interest rate and current price level will
increase
If the real exchange rate depreciates from 1 Japanese good per US good to .5 Japanese good per US
good then US exports _____ and US imports ________ - CORRECT ANSWER✅✅US exports INCREASE;
US imports DECREASE
Analysis of population growth around the world concludes that countries with high population growth
tend to: - CORRECT ANSWER✅✅Have a lower level of income per worker than other parts of the world.
If the fraction of employed workers who lose their job each month (the rate of job separation) is .01 and
the fraction of the unemployed who find a job each month is .09 than the natural rate of unemployment
is : - CORRECT ANSWER✅✅SE=FE= 10 percent
According to the Institutions Theory of economic growth, which of the following is essential for a
country's economic development?
A) low pop. growth rate
B)Free trade
C) a fair legal system which protects property rights
D) Economic research institutes such as universities - CORRECT ANSWER✅✅C) a fair legal system which
protects property rights
If a US corp. sells a product in Europe and uses the proceeds to purchase shares in a European corp.
then the US net Exports _____ and net capital Outflows _______ - CORRECT ANSWER✅✅increase,
increase
The inflation tax is paid: - CORRECT ANSWER✅✅by all holders of money
AND ANSWERS
In the Solow model, if investment exceeds depreciation the capital stock will ______, and output will
________ until the steady state is attained - CORRECT ANSWER✅✅increase, increase
If the number of employed workers equals 200 million and the number of unemployed workers equals
20 million, the unemployment rate equals ______ percent (rounded to nearest percent) - CORRECT
ANSWER✅✅9% (20mil/220mil)
If wage rigidity holds the real wage above equilibrium level, an increase in the supply of labor will
_______ the number employed - CORRECT ANSWER✅✅Increase
If the real return on government bonds is 3 percent and the expected rate of inflation is 4 percent, then
the cost of holding money is _____ percent - CORRECT ANSWER✅✅7%
The fact that the Soviet Union's input was the same as the US, but produced only 1/3 of the US GDP
highlights the importance of which factor in growth? - CORRECT ANSWER✅✅Efficiency
Which of the following is an example of frictional unemployment? - CORRECT ANSWER✅✅Dave
searches for a new job after voluntarily moving to San Diego.
In the Solow growth model with population growth, but no technological change, a higher level of
steady-state output per worker can be obtained by all of the following except:
A) Increasing the saving rate
B) decreasing the depreciation rate
C) increasing the population growth rate
D) increasing the capital per worker ratio - CORRECT ANSWER✅✅C) Increasing the population growth
rate.
All of the following are causes of structural unemployment except:
A)Minimum-wage laws
, B)the monopoly power of unions
C) unemployment insurance
D) Efficiency wages - CORRECT ANSWER✅✅C) Unemployment Insurance
If the Fed announces that it will raise the money supply in the future but does not change the money
supply today, - CORRECT ANSWER✅✅Both the nominal interest rate and current price level will
increase
If the real exchange rate depreciates from 1 Japanese good per US good to .5 Japanese good per US
good then US exports _____ and US imports ________ - CORRECT ANSWER✅✅US exports INCREASE;
US imports DECREASE
Analysis of population growth around the world concludes that countries with high population growth
tend to: - CORRECT ANSWER✅✅Have a lower level of income per worker than other parts of the world.
If the fraction of employed workers who lose their job each month (the rate of job separation) is .01 and
the fraction of the unemployed who find a job each month is .09 than the natural rate of unemployment
is : - CORRECT ANSWER✅✅SE=FE= 10 percent
According to the Institutions Theory of economic growth, which of the following is essential for a
country's economic development?
A) low pop. growth rate
B)Free trade
C) a fair legal system which protects property rights
D) Economic research institutes such as universities - CORRECT ANSWER✅✅C) a fair legal system which
protects property rights
If a US corp. sells a product in Europe and uses the proceeds to purchase shares in a European corp.
then the US net Exports _____ and net capital Outflows _______ - CORRECT ANSWER✅✅increase,
increase
The inflation tax is paid: - CORRECT ANSWER✅✅by all holders of money
