ECON 1000 (Summer 2018 – Section 03) Exam #2D – Answer Key
1. I am taking ______of the exam. D. Version D
2. Per Capita GDP for the World as a whole is approximately $15,800 and for the U.S. is approximately $56,300. In comparison, the value of Per Capita GDP in the European Union is approximately C. $37,800 (between the value for the World as a whole and the value for the U.S.).
3. A situation in which the sum of gains and losses over all people is negative is defined as a B. negative-sum environment.
4. Which of the following statements is accurate? “Between 1915 and 2015 the value of… D. More than one (perhaps all) of the above answers are correct. [A/B/C are all correct]
5. On April 29, 2017, former heavyweight boxing champion Wladimir Klitschko fought the last fight of his career against (and was knocked out in the 11th round by) Anthony Joshua in London, England. This fight was only available in the U.S. on “Pay Per View.” The live broadcast of this fight in the U.S. (only available on Showtime) was excludable but non-rival, and was therefore a B. Club Good.
6. ______refers to the tendency for wealthy people in poor countries to invest their financial resources abroad instead of at home C. Capital Flight
7. ______is the value of GDP computed using prices from an arbitrary base year. C. Real GDP
8. The “Misery Index” B. is computed by adding the unemployment rate and the inflation rate together.
9. As depicted in the Expanded Circular Flow Diagram, government collects taxes from A. domestic households and domestic firms (but not from any foreign sources).
10. The efficient level of output for this good is _____ units. B. 240
11. To maximize profit, this monopolist would sell ______, at a price of ______. C. 125 units of output; $18.90 per unit.
12. When this monopolist chooses the price and quantity which maximizes profit, Deadweight Loss is C. equal to “areas (c)+(d).”
13. The ______function of government can be described as government policies aimed at changing the final assignment of goods/services across consumers, usually with the intention of realizing a “fairer” apportionment of income/consumption/wealth. C. Distribution 14. Brenda is currently 20 years old. She just inherited $1,000,000 from a distant relative that she never met. She invests all of the money in a government bond that will pay her a return of exactly 3% per year. When she retires at age 68 – which will be 48 years in the future – this asset will be worth approximately ______. D. $4,000,000
15. Dave bought 4 comic books from Eric. Assume that nobody else besides Dave and Eric was impacted by this transaction. This trade gave Dave a Consumer’s Surplus of $10 and generated a Social Surplus of $30. It follows that Eric realized ______from this trade. C. a Producer’s Surplus of $20
16. Since January 1948 there have only been three instances in which the unemployment rate in the U.S. (reported on a monthly basis) has been above 8%. This occurred most recently for A. 43 consecutive months from February 2009 through August 2012.
17. For this country Net Exports are equal to ______. C. € 450 million Euros
18. For this country, Per Capita Gross Domestic Product is equal to ______. D. € 29,500
19. In 2014 there were approximately ______AIDS-related deaths worldwide, with _____ of these occurring in Africa. A. 1.2 million; 65%.
20. Focusing on government spending as a percentage of GDP in the U.S., we observed that: (i) between 1820 and 1917 this figure was never larger than 9.76% and (ii) before 2008 this value was above 38.67% in only three single years (1943, 1944, and 1945). In every single year since 2008, government spending in the U.S. as a percentage of GDP has been D. above 38.67%.
21. Consider a market in which the maximum possible value of Total Social Surplus is $2,000,000. If the realized level of Total Social Surplus is $1,800,000, then Deadweight Loss in this market is equal to ______. B. $200,000
22. A good that is used in the production process that is not (itself) a final good or service is ______. C. an intermediate good
23. The United States is C. Country C
24. The “Catch-up effect” suggests that, all other factors fixed, B. growth rates of less developed countries typically exceed growth rates of developed countries, implying that the gap in GDP between less developed and developed countries will decrease over time.
25. Between 1970 and 2014 China had an average annual growth rate of 9.29% and the European Union had an average annual growth rate of 2.26%. In comparison, during this same period the average annual growth rate for the World as a whole was ______. C. 3.06%
26. In equilibrium Total Consumers’ Surplus is equal to ______and Total Producers’ Surplus is equal to ______. D. areas “(a)+(b)+(e)”; areas “(c)+(d)+(f).”
27. If 2,050 units were traded, Deadweight-Loss would be equal to D. area “(i).”
28. “Country X” experienced deflation during 2017. This means that by the end of the year A. the overall price level was lower than at the start of the year.
29. Widgets are non-rival in consumption and non-excludable. As a result, if widgets were simply sold in the marketplace, we should expect A. less than the efficient amount of widgets to be traded.
30. When comparing unemployment rates for different countries around the world in 2015, it was observed that ______had an unemployment rate of 2.0% and ______had an unemployment rate of 22.5%. B. Singapore; Spain.
31. ______refers to a situation in which the free market outcome is inefficient, in that there is a positive Deadweight Loss at the free market level of trade. B. Market Failure
32. When observing annual inflation rates on a monthly basis, the highest rate realized in the United States between January 1948 and December 2015 was a rate of D. 14.76% in March 1980.
33. ______was defined as improvements over time in a society’s quality of life and living standards. B. Economic Development