VANCOUVER ISLAND UNIVERSITY ECON212: PRINCIPLES OF MACROECONOMICS, Spring 2013 MIDTERM TEST It Name (Last, First): ID a: Signature: This Exam has total 12 pages including the cover page INSTRUCTIONS: * TOTAL MARKS: 75. DURATION: 75 MINUTES. © PLEASE ANSWER YOUR MCQS IN THE TABLE PROVIDED ON THE ADDITIONAL SHEET PROVIDED AND OTHER ANSWERS IN THE SPACE PROVIDED. © FOR SHORT ANSWER AND EASY TYPE QUESTIONS > YOU MUST SHOW YOUR ALL WORK TO GET FULL MARKS. IF YOU DO NOT SHOW WORK, YOU MAY NOT GET FULL MARKS EVEN FOR A CORRECT ANSWER. > USE THE MARKS ASSIGNED TO EACH QUESTION AS A GUIDE TO ALLOCATING YOUR TIME ACROSS QUESTIONS. Luck on Your ExamECON212: Midterm Exam I! | 2 ‘March 18, 2013, PART A: MCQ (There are 30 MCQs in this section which is worth 30 marks) 01. In macroeconomics, the “output gap" is the difference between ‘a) real and nominal national income b) output and employment ) potential real national income and actual real national income 4d) real GNP and real GDP ) output in the current year and output in the base year (02. When the unemployment rate is higher than the natural unemployment rate, real GDP is than potential GOP and the output gap is a) unchanged; unchanged b) smaller; positive ) smaller; negative d)_ greater; positive e) greater; negative 03, The table below provides macroeconomic data for a hypothetical economy, Dollar amounts are all in constant- dolar terms teal Pate Unem Year | output titionsat | Potential Outpt oloyment 3) 2002 402 404 | 71 2008 “408 ant | 72 [aooe ass 63 200s _|___420 418 [ss 2006 220 0 2007 20 223 70 [_ 2008 a5 25 ___63 Refer tothe table. In which years was this economy experiencing an inflationary gap? a) 2002, 2003 b) 2006, 2007 ©) 2005, 2006 4) 2004, 2008, 04, in the simple macroeconomic model, “autonomous expenditures" are a) induced expenditures 'b) non-domestic expenditures )__ not dependent on national income d) dependent on national income e) those which are constant0s. 07. 09, 10, 1. ECON212: ‘erm Exam Il March 18, 2013 ‘The CPI in 2007 was 120 and in 2008 was 125. The inflation rate is a) 5% b) 2.6% 4.2% @) 1128 ) Insufficient information . The inflation rate is the annual percentage change in a) real GDP b)_ the quantity of money ©) the price level 4d) labour productivity Between 1910 and 2010, the real GPD grew at a faster rate than the population growth rate. So, the average growth rate of real GDP per person in Canada was a) Negative b) positive zero d) unknown - Other things being equal, a reduction in the money supply will ead to a {2) rise in the rate of interest and no change in investment expenditure b)_ fallin the rate of interest and an increase in investment expenditure ©) rise in the rate of interest and a decrease in investment expenditure 4) ise in the rate of interest and in increase in investment expenditure €e) fallin the rate of interest and a decrease in investment expenditure According to the quantity theory of money, if the money supply doubles a) real income will double b) money prices will be halved ©) there will be no effect on money prices 4d) money prices will double €) relative prices will double The largest component of the liabilities of the Bank of Canada is, a) Government of Canada securities 'b) deposits of commercial banks and other financial institutions ©) loans to private individuals 4) Government of Canada deposits e) Canadian dollars in circulation Refer to the table. Assume that Bank North is operating with no excess reserves. What is their actual reserve ratio? Bank North's Balance Sheet a) 13.6% | by 20% Assets Liabilities ©) 12% Reserves | $500 _| Deposits $2200 | 5 ee [Loans [$2000 [Capital_[$300__ $2500 $2500 He hed |e ee