1) The largest source of household income in the U.S. is obtained from

A. stock dividends

B. wages and salaries

C. interest earnings

D. rental income

2) The market where business sell goods and services to households and the government is called the

A. goods market

B. factor market

C. capital market

D. money market

3) Real gross domestic product is best defined as

A. the market value of intermediate goods and services produced in an economy, including exports

B. all goods and services produced in an economy, stated in the prices of a given year and multiplied by quantity

C. the market value of all final goods and services produced in an economy, stated in the prices of a given year

D. the market value of goods and services produced in an economy, stated in current-year prices

4) Underemployment includes people

A. who work “-off-the-books”- to avoid tax liabilities

B. who are working part time, or not using all their skills at a full-time job

C. who are tired of looking for a job, so they quit looking, but still want one

D. whose skills are not in demand anymore

5) The Bureau of Economic Analysis is responsible for which of the following?

A. Setting interest rates

B. Managing the money supply

C. Calculating U.S. gross domestic product]

D. Paying unemployment benefits

6) The Federal Reserve provides which of the following data?

A. Federal funds rate

B. Stock price of GE

C. Bond yields of corporations

D. Debt to GDP of Ireland

7) Consider if the government instituted a 10 percent income tax surcharge. In terms of the AS/AD model, this change should have

A. shifted the AD curve to the left

B. shifted the AD curve to the right

C. made the AD curve flatter

D. made the AD curve steeper

8) If the depreciation of a country’-s currency increases its aggregate expenditures by 20, the AD curve will

A. shift right by more than 20

B. shift right by less than 20

C. shift right by exactly 20

D. not shift at all

9) Aggregate demand management policies are designed most directly to

A. minimize unemployment

B. minimize inflation

C. control the aggregate level of spending in the economy

D. prevent budget deficits or surpluses

10) Suppose that consumer spending is expected to decrease in the near future. If output is at potential output, which of the following policies is most appropriate according to the AS/AD model?

A. An increase in government spending

B. An increase in taxes

C. A reduction in government spending

D. No change in taxes or government spending

11) According to Keynes, market economies

A. never experience significant declines in aggregate demand

B. quickly recover after they experience a significant decline in aggregate demand

C. may recover slowly after they experience a significant decline in aggregate demand

D. are constantly experiencing significant declines in aggregate demand

12) The laissez-faire policy prescription to eliminate unemployment was to

A. eliminate labor unions and government policies that hold real wages too high

B. strengthen unions and government regulations protecting unions and workers

C. increase real wages so that people are encouraged to work

D. have government guarantee jobs for everyone

13) In the AS/AD model, an expansionary monetary policy has the greatest effect on the price level when it

A. increases both nominal and real income

B. increases real income but not nominal income

C. increases nominal income but not real income

D. doesn’-t increase real or nominal income

14) The Federal funds rate

A. is always slightly higher than the discount rate

B. can never be close to zero

C. may sometimes have to be targeted at zero

D. is an intermediate target

15) What tool of monetary policy will the Federal Reserve use to increase the federal funds rate from 1% to 1.25%?

A. Open-market operations

B. The discount rate

C. A change in reserve requirements

D. Margin requirements

16) If the Federal Reserve increases the required reserves, financial institutions will likely lend out

A. more than before, increasing the money supply

B. less than before, decreasing the money supply

C. more than before, decreasing the money supply

D. less than before, increasing the money supply

17) Suppose the money multiplier in the U.S. is 3. Suppose further that if the Federal Reserve changes the discount rate by 1 percentage point, banks change their reserves by 300. To increase the money supply by 2700 the Federal Reserve should

A. reduce the discount rate by 3 percentage points

B. reduce the discount rate by 10 percentage points

C. raise the discount rate by 3 percentage points

D. raise the discount rate by 10 percentage points

18) If the Federal Reserve reduced its reserve requirement from 6.5 percent to 5 percent. This policy would most likely

A. increase both the money multiplier and the money supply

B. increase the money multiplier but decrease the money supply

C. decrease the money multiplier but increase the money supply

D. decrease both the money multiplier and the money supply

19) A country can have a trade deficit as long as it can

A. purchase foreign assets

B. make loans to other countries

C. borrow from or sell assets to foreigners

D. produce more than it consumes.

20) A weaker dollar

A. raises inflation and contracts the economy.

B. reduces inflation and contracts the economy

C. raises inflation and expands the economy

D. reduces inflation and expands the economy

21) In the short run, a trade deficit allows more consumption, but in the long run, a trade deficit is a problem because

A. the country eventually will consume more and produce less

B. the country eventually will sell all its financial assets to foreigners

C. the domestic currency will appreciate

D. the country eventually has to produce more than it consumes in order to pay foreigners their profits

22) Considering an economy with a current trade deficit and considering only the direct effect on income, an expansionary monetary policy tends to

A. decrease the exchange rate and increase the trade deficit

B. increase the exchange rate and increase the trade deficit

C. decrease the exchange rate and decrease the trade deficit

D. increase the exchange rate and decrease the trade deficit

23) The balance of trade measures the

A. difference between the value of imports and exports

B. share of U.S. imports coming from various regions of the world

C. share of U.S. exports going to various regions of the world

D. exchange rate needed to make imports equal exports

24) When a country runs a trade deficit, it does so by:

A. borrowing from foreign countries or selling assets to them.

B. borrowing from foreign countries or buying assets from them.

C. lending to foreign countries or selling assets to them.

D. lending to foreign countries or buying assets from them.

25) Expansionary fiscal policy tends to

A. raise U.S. income, increase U.S. imports, and increase the trade deficit

B. raise U.S. income, increase U.S. imports, and lower the trade deficit

C. lower U.S. income, reduce U.S. imports, and increase the trade deficit

D. lower U.S. income, reduce U.S. imports, and lower the trade deficit

26) In considering the net effect of expansionary fiscal policy on the trade deficit, the

A. income effect offsets the price effect

B. price effect offsets the income effect

C. income and price effects work in the same direction, so the trade deficit is decreased

D. income and price effects work in the same direction, so the trade deficit is increased

27) If U.S. interest rates fall relative to Japanese interest rates and Japanese inflation falls relative to U.S. inflation, then the

A. dollar will lose value in terms of yen

B. dollar will gain value in terms of yen

C. dollar’-s value will not change in terms of yen

D. change in the dollar’-s value cannot be determined

28) Expansionary monetary policy tends to

A. lower the U.S. interest rate and increase the U.S. exchange rate

B. lower the U.S. interest rate and decrease the U.S. exchange rate

C. increase the U.S. interest rate and decrease the U.S. exchange rate

D. increase the U.S. interest rate and increase the U.S. exchange rate

29) The U.S. has limits on Chinese textile imports. Such limits are an example of

A. a tariff

B. a quota

C. a regulatory trade restriction

D. an embargo

30) Duties imposed by the U.S. government on imported Chinese frozen and canned shrimp are an example of

A. tariffs

B. quotas

C. voluntary restrictions

D. regulatory trade restrictions

 

 

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1)The Midnight hour, a localnightclub, earned $100,000 inaccounting profit last year. Thisyear the owner, who had invested $ 1million in the club, decided toclose the club. What can you sayabout economic profit (and the rateof return)in the nightclub business?ANSWER:Economic Profit = TR(total revenue)-TC(total economic cost)EP = $100,000 – $1,000,000EP = -$900,000Since EP is a negative number thefirm should shut down, the output isnot positive, therefore the companyoperates at a loss, the managerneeds to determine how long theywant to continue with this lossprocess.Does this sound like the correctanswer?Thanks,EY

 

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1) The GAMMA Corp. has decided to enter the next generation in customer service. In order to do so they need to purchase a new piece of equipment. The equipment is highly specialized and needs to be created to exact specifications. As a result it will take at least 30 months for the equipment to be ready for installation and will cost a total of $270,000. GAMMA Corp. wants to set aside the money it needs for the equipment today. Being extremely conservative the company will be placing the funds it needs for the purchase into a GIC with a rate of 2.1% compounded Semi-Annually.

A- How much money are they setting aside today?

B- What would the interest rate be if they only needed to save $221,920.32 at the beginning? (Input as a percentage without the % sign)(Remember (-) where appropriate)

C -How much would they need if they had more time to allow money to grow such as if the equipment would be ready in 5.5 Years at a rate of 2.1% Compounded Semi-Annually?

2) Jane is an analyst and their company wants to get a return of atleast 4.4% compounded Quarterly on their investment. Jane will only have use of the money for 12 Months before the company needs it for another project. Jane has been give $1,200 to invest.

A- If Jane is able to find an investment matching the criteria, how much money will they have after 12 Months?

B- If the rate of return ended up being 11.5% and the company invested their $1,200. How much would they have after 12 Months?

C- The company liked the 11.5% and decided to leave the money invest until they earned 6,573.13. How long was the money actually invested for in MONTHS? (REMEMBER (-) signs where appropriate).

 

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1) The Hawaiian Corporation expects this year’s net income to be $12 million. The firm’s target debt/assets ratio is 30 percent. This year, Hawaiian has $20 million profitable investment opportunities. According to the residual dividend policy, what should be Hawaiian’s dividend payout ratio this year?

 

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1. The function of the rules of inference is to justify the steps of a proof. A) True B) False 2. A proof is a sequence of steps in which each step is either a premise or follows from earlier steps in the sequence according to the rules of inference. A) True B) False 3. Implication rules can be validly applied to part of a line. A) True B) False 4. According to the axiom of replacement, logically equivalent expressions may replace each other within the context of a proof. A) True B) False 5. Replacement rules are pairs of logically equivalent statement forms. A) True B) False 6. Conditional proof (CP) is a method that starts by assuming the negation of the required statement and then validly deriving a contradiction on a subsequent line. A) True B) False 7. Indirect proof (IP) is a method that starts by assuming the antecedent of a conditional statement on a separate line and then proceeds to validly derive the consequent on a separate line. A) True B) False 8. Invalid arguments cannot be proven as invalid using the methods of natural deduction. A) True B) False Document Preview:

Introduction to Formal Logic – Natural Deduction Examination – Spring 2014 Part I: True/False Instructions. Please circle ‘True ‘if the statement is true and ‘False’ if the statement is false. (2 pts each) 1. The function of the rules of inference is to justify the steps of a proof. A) TrueB) False 2. A proof is a sequence of steps in which each step is either a premise or follows from earlier steps in the sequence according to the rules of inference. A) TrueB) False 3. Implication rules can be validly applied to part of a line. A) TrueB) False 4. According to the axiom of replacement, logically equivalent expressions may replace each other within the context of a proof. A) TrueB) False 5. Replacement rules are pairs of logically equivalent statement forms. A) TrueB) False 6. Conditional proof (CP) is a method that starts by assuming the negation of the required statement and then validly deriving a contradiction on a subsequent line. A) TrueB) False 7. Indirect proof (IP) is a method that starts by assuming the antecedent of a conditional statement on a separate line and then proceeds to validly derive the consequent on a separate line. A) TrueB) False 8. Invalid arguments cannot be proven as invalid using the methods of natural deduction. A) TrueB) False 9. One of the rules of inference is DeMorgan’s theorem: ~(P v Q) :: (~P · ~ Q) A) TrueB) False 10. When an indirect proof is discharged, any lines derived from the assumption can no longer be used in the subsequent proof. A) TrueB) False Part II: Rules of Implication Instructions. Using the rules of implication, please provide the proofs for the following problems. Please provide justifications for each step. (7 pts each) 11. 1. T ? ( P v Q ) 2. S v ~ ( P v Q ) 3. ~S / ~ T 12. 1. ( S ? R ) · Q 2. R ? T / S ? T 13. 1. [ (…

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