ECO 550 Week 5 Midterm Quiz 2. Get an A++.
Question 1
The forecasting technique which attempts to forecast short-run changes and makes use of economic indicators known as leading, coincident or lagging indicators is known as:
Answer
econometric technique
time-series forecasting
opinion polling
barometric technique
judgment forecasting
Question 2
If two alternative economic models are offered, other things equal, we would
Answer
tend to pick the one with the lowest R2.
select the model that is the most expensive to estimate.
pick the model that was the most complex.
select the model that gave the most accurate forecasts
Question 3
The variation in an economic time-series which is caused by major expansions or contractions usually of greater than a year in duration is known as:
Answer
secular trend
cyclical variation
seasonal effect
unpredictable random factor
Question 4
Consumer expenditure plans is an example of a forecasting method. Which of the general categories best described this example?
Answer
time-series forecasting techniques
barometric techniques
survey techniques and opinion polling
econometric techniques
input-output analysis
Question 5
The type of economic indicator that can best be used for business forecasting is the:
Answer
leading indicator
coincident indicator
lagging indicator
current business inventory indicator
optimism/pessimism indicator
Question 6
The use of quarterly data to develop the forecasting model Yt = a +bYt−1 is an example of which forecasting technique?
Answer
Barometric forecasting
Time-series forecasting
Survey and opinion
Econometric methods based on an understanding of the underlying economic variables involved
Input-output analysis
Question 7
Purchasing power parity or PPP says the ratios composed of:
Answer
interest rates explain the direction of exchange rates.
growth rates explain the direction of exchange rates.
inflation rates explain the direction of exchange rates.
services explain the direction exchange rates.
public opinion polls explain the direction of exchange rates.
Question 8
If Ben Bernanke, Chair of the Federal Reserve Board, begins to tighten monetary policy by raising US interest rates next year, what is the likely impact on the value of the dollar?
Answer
The value of the dollar falls when US interest rates rise.
The value of the dollar rises when US interest rates rise.
The value of the dollar is not related to US interest rates.
This is known as Purchasing Power Parity or PPP.
Question 9
If the British pound (₤) appreciates by 10% against the dollar:
Answer
both the US importers from Britain and US exporters to Britain will be helped by the appreciating pound.
the US exporters will find it harder to sell to foreign customers in Britain.
the US importer of British goods will tend to find that their cost of goods rises, hurting its bottom line.
both US importers of British goods and exporters to Britain will be unaffected by changes in foreign exchange rates.
Question 10
Trading partners should specialize in producing goods in accordance with comparative advantage, then trade and diversify in consumption because
Answer
out-of-pocket costs of production decline
free trade areas protect infant industries
economies of scale are present
manufacturers face diminishing returns
more goods are available for consumption
Question 11
Using demand and supply curves for the Japanese yen based on the $/¥ price for yen, an increase in US INFLATION RATES would
Answer
Decrease the demand for yen and decrease the supply of the yen.
Increase the demand for yen and decrease the supply of the yen.
Increase the demand and increase the supply of yen.
Decrease both the supply and the demand of yen.
Have no impact on the demand or supply of the yen.
Question 12
An increase in the exchange rate of the U.S. dollar relative to a trading partner can result from
Answer
higher anticipated costs of production in the U.S.
higher interest rates and higher inflation in the U.S.
higher growth rates in the trading partner’s economy
a change in the terms of trade
lower export industry productivity
Question 13
The purchasing power parity hypothesis implies that an increase in inflation in one country relative to another will over a long period of time
Answer
increase exports
reduce the competitive pressure on prices
lower the value of the currency in the country with the higher inflation rate
increase foreign aid
increase the speculative demand for the currency
Question 14
The isoquants for inputs that are perfect substitutes for one another consist of a series of:
Answer
right angles
parallel lines
concentric circles
right triangles
Question 15
Marginal factor cost is defined as the amount that an additional unit of the variable input adds to ____.
Answer
marginal cost
variable cost
marginal rate of technical substitution
total cost
Question 16
The combinations of inputs costing a constant C dollars is called:
Answer
an isocost line
an isoquant curve
the MRTS
an isorevenue line
Question 17
Given a Cobb-Douglas production function estimate of .72K.18 for a given industry, this industry would have:
Answer
increasing returns to scale
constant returns to scale
decreasing returns to scale
negative returns to scale
Question 18
Which of the following is never negative?
Answer
marginal product
average product
production elasticity
marginal rate of technical substitution
slope of the isocost lines
Question 19
The primary purpose of the Cobb-Douglas power function is to:
Answer
allow one to make estimates of cost-output relationships
allow one to make predictions about a resulting increase in output for a given increase in the inputs
aid one in gaining accurate empirical values for economic variables
calculate a short-run linear total cost function
Question 20
According to the theory of cost, specialization in the use of variable resources in the short-run results initially in:
Answer
decreasing returns and declining average and marginal costs
increasing returns and declining average and marginal costs
increasing returns and increasing average and marginal costs
decreasing returns and increasing average and marginal costs
Question 21
What method of inventory valuation should be used for economic decision-making problems?
Answer
book value
original cost
current replacement cost
cost or market, whichever is lower
historical cost
Question 22
For a short-run cost function which of the following statements is (are) not true?
Answer
The average fixed cost function is monotonically decreasing.
The marginal cost function intersects the average fixed cost function where the average variable cost function is a minimum.
The marginal cost function intersects the average variable cost function where the average variable cost function is a minimum.
The marginal cost function intersects the average total cost function where the average total cost function is a minimum.
Question 23
The existence of diseconomies of scale (size) for the firm is hypothesized to result from:
Answer
transportation costs
imperfections in the labor market
imperfections in the capital markets
problems of coordination and control encountered by management
Question 24
Economies of Scope refers to situations where per unit costs are:
Answer
Unaffected when two or more products are produced
Reduced when two or more products are produced
Increased when two or more products are produced
Demonstrating constant returns to scale
Demonstrating decreasing returns to scale
Question 25
The cost function is:
Answer
a means for expressing output as a function of cost
a schedule or mathematical relationship showing the total cost of producing various quantities of output
similar to a profit and loss statement
incapable in being developed from statistical regression analysis
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