Mid term 2 - ECO 550

Mid Term 2:

 4 out of 4 points


	Which of the following barometric indicators would be the most helpful for forecasting future sales for an industry?
	Selected Answer: leading economic indicators.Correct Answer: leading economic indicators.

 Question 2

4 out of 4 points


	The use of quarterly data to develop the forecasting model Yt = a +bYt−1 is an example of which forecasting technique?
	Selected Answer: Time-series forecastingCorrect Answer: Time-series forecasting

 Question 3

4 out of 4 points


	An example of a time series data set is one for which the:
	Selected Answer: data would be collected for a given firm for several consecutive periods (e.g., months).Correct Answer: data would be collected for a given firm for several consecutive periods (e.g., months).

 Question 4

4 out of 4 points


	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:
	Selected Answer: barometric techniqueCorrect Answer: barometric technique

 Question 5

4 out of 4 points


	The type of economic indicator that can best be used for business forecasting is the:
	Selected Answer: leading indicatorCorrect Answer: leading indicator

 Question 6

4 out of 4 points


	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:
	Selected Answer: cyclical variationCorrect Answer: cyclical variation

 Question 7

4 out of 4 points


	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?
	Selected Answer: The value of the dollar rises when US interest rates rise.Correct Answer: The value of the dollar rises when US interest rates rise.

 Question 8

4 out of 4 points


	In a recession, the trade balance often improves because
	Selected Answer: fewer households can afford luxury importsCorrect Answer: fewer households can afford luxury imports

 Question 9

4 out of 4 points


	An increase in the exchange rate of the U.S. dollar relative to a trading partner can result from
	Selected Answer: higher growth rates in the trading partner’s economyCorrect Answer: higher growth rates in the trading partner’s economy

 Question 10

4 out of 4 points


	The optimal currency area involves a trade-off of reducing transaction costs but the inability to use changes in exchange rates to help ailing regions. If the US, Canada, and Mexico had one single currency (the Peso-Dollar) we would tend to see all of the following EXCEPT:
	Selected Answer: Less migration of workers across the three countries.Correct Answer: Less migration of workers across the three countries.

 Question 11

4 out of 4 points


	Trading partners should specialize in producing goods in accordance with comparative advantage, then trade and diversify in consumption because
	Selected Answer: more goods are available for consumptionCorrect Answer: more goods are available for consumption

 Question 12

4 out of 4 points


	Companies that reduce their margins on export products in the face of appreciation of their home currency may be motivated by a desire to
	Selected Answer: increase production volume to realize learning curve advantagesCorrect Answer: increase production volume to realize learning curve advantages

 Question 13

4 out of 4 points


	The purchasing power parity hypothesis implies that an increase in inflation in one country relative to another will over a long period of time
	Selected Answer: lower the value of the currency in the country with the higher inflation rateCorrect Answer: lower the value of the currency in the country with the higher inflation rate

 Question 14

4 out of 4 points


	Marginal revenue product is defined as the amount that an additional unit of the variable input adds to ____.
	Selected Answer: total revenueCorrect Answer: total revenue

 Question 15

4 out of 4 points


	Which of the following is never negative?
	Selected Answer: average productCorrect Answer: average product

 Question 16

4 out of 4 points


	The marginal rate of technical substitution may be defined as all of the following except:
	Selected Answer: the rate at which all combinations of inputs have equal total costsCorrect Answer: the rate at which all combinations of inputs have equal total costs

 Question 17

4 out of 4 points


	The combinations of inputs costing a constant C dollars is called:
	Selected Answer: an isocost lineCorrect Answer: an isocost line

 Question 18

4 out of 4 points


	If the marginal product of labor is 100 and the price of labor is 10, while the marginal product of capital is 200 and the price of capital is $30, then what should the firm?
	Selected Answer: The firm should use relatively more laborCorrect Answer: The firm should use relatively more labor

 Question 19

4 out of 4 points


	In a production process, an excessive amount of the variable input relative to the fixed input is being used to produce the desired output. This statement is true for:
	Selected Answer: stage IIICorrect Answer: stage III

 Question 20

4 out of 4 points


	Economies of scale exist whenever long-run average costs:
	Selected Answer: Decrease as output is increasedCorrect Answer: Decrease as output is increased

 Question 21

4 out of 4 points


	According to the theory of cost, specialization in the use of variable resources in the short-run results initially in:
	Selected Answer: increasing returns and declining average and marginal costsCorrect Answer: increasing returns and declining average and marginal costs

 Question 22

4 out of 4 points


	____ are defined as costs which are incurred regardless of the alternative action chosen in a decision-making problem.
	Selected Answer: Sunk costsCorrect Answer: Sunk costs

 Question 23

4 out of 4 points


	What method of inventory valuation should be used for economic decision-making problems?
	Selected Answer: current replacement costCorrect Answer: current replacement cost

 Question 24

4 out of 4 points


	For a short-run cost function which of the following statements is (are) not true?
	Selected Answer: The marginal cost function intersects the average fixed cost function where the average variable cost function is a minimum.Correct Answer: The marginal cost function intersects the average fixed cost function where the average variable cost function is a minimum.

 Question 25

4 out of 4 points


	Economies of Scope refers to situations where per unit costs are:
	Selected Answer: Reduced when two or more products are producedCorrect Answer: Reduced when two or more products are produced

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