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Semester 2 Examinations 2010/ 2011
Exam Code(s) 1BA1, 1BA11, 1BA6, 1BA7, 1BCS1, 1BCW1, 1BFS1, 1BGL1,1BHR1, 1BIS1, 1BTP1, 1BWM1, 1BWM Exam(s) 1 st^ B.A., 1st^ B.A. (Hist.), 1st^ B.A. (PSP), 1st^ B.A. (Psych.), 1st^ B.A. (Child St.), 1st^ B.A. (Creat. Writ.), 1st^ B.A. (Film St.), B.A. (Gaeilge & Leann an Aist.), 1st^ B.A. (Human Rights), 1st^ B.A. (Irish St.), 1st^ B.A. (Theatre & Perform.), 1st^ B.A. (Women St.) Module Code(s) EC Module(s) Principles of Macroeconomics Paper No. 1 Repeat Paper External Examiner(s) Professor Pat McGregor & Professor Cillian Ryan Internal Examiner(s) Professor John McHale Professor Terrence McDonough
Instructions:
Answer all questions (no negative marking). Please use the MCQ answer sheet provided, using lines 1 – 50. Duration 2 hrs. No. of Pages Discipline(s) Economics Course Co-ordinator(s) Terrence McDonough Requirements : MCQ YES Release to Library: Yes No Handout Statistical/ Log Tables Cambridge Tables Graph Paper Log Graph Paper Other Materials X
- The value of all goods and services produced domestically in the economy in a year, regardless of the nationality of the owners of the factors of production, is: a. Net exports. b. Gross domestic product. c. Self-employment income. d. National savings.
- According to neoclassical theory, the diminishing marginal revenue product of labour leads to a: a. downward-sloping Demand curve for labour. b. vertical Demand curve for labour. c. upward-sloping Demand curve for labour. d. downward-sloping Supply curve for labour.
- According to neoclassical theory, the substitution and income effects make the labour Supply curve: a. downward-sloping. b. horizontal. c. vertical. d. backward-bending.
- In the neoclassical labour market the equilibrium wage rate and the equilibrium quantity of labour are determined where: a. the Supply curve exceeds the Demand curve. b. the Supply curve intersects the Demand curve. c. the Demand curve exceeds the Supply curve. d. you draw the vertical Demand curve, no matter the Supply curve.
- In the neoclassical labour market, which are the effects of a minimum wage law? a. if the minimum wage is higher than the equilibrium wage, then there will be unemployment. b. always an increase in wages. c. always a decrease in wages. d. if the minimum wage is lower than the equilibrium wage, then there will be an increase in wages.
- In order to study inflation in a neoclassical framework, which is the appropriate model? a. the labour market. b. the externalities market. c. the aggregate demand and supply model. d. you don’t need a model, you must look at the data.
- According to the neoclassical theory, which is the difference between the long-run and the short-run supply curve? a. the first is vertical at the natural level of output, the second is downward-sloping. b. the first is vertical at the natural level of output, the second is upward-sloping. c. there is no difference, they are both vertical. d. there is no difference, there is just one supply curve both for the short and the long run.
- Which is the problem with environmental effects in standard neoclassical models? a. there is no problem: environmental effects are already taken into account in all models. b. the problem lies in the fact that environmental externalities are not taken into account in standard models. c. there is no problem: environmental effects have no economic consequences, so they can be disregarded in economic models. d. the problem lies in the fact that the effects of lobbies (environmentalists, polluting firms-owners...) are not able to influence the way in which standard models are built.
- In the presence of costly environmental externalities, how can you correct inefficient market equilibriums? a. creating a social planner able to modify firms’ production plans. b. market equilibriums are always efficient, therefore there is no need to correct them. c. internalizing costs, for example with pollution taxes. d. it is impossible to correct inefficient market equilibriums.
- The Coase theorem states that: a. the existence of externalities avoid the possibility to reach an efficient allocation of resources. b. there is an optimal level of pollution, corresponding to the maximum level of pollution that an economy can sustain before the collapse. c. it is possible to calculate the total cost of pollution. d. if property rights are well defined, and no significant transaction costs exist, an efficient allocation of resources will result even with externalities.
- Economics is the study of the social relations people enter into in the course of producing goods and services and how those social relations change over time. This definition of economics comes from which school of economics? a. neoclassical b. Keynesian c. Institutionalist d. Marxian
- Relationships are mainly contractual in which school of economics? a. neoclassical b. Keynesian c. Institutionalist d. Marxian
- Instability is the key factor in which school? a. neoclassical b. Keynesian c. Institutionalist d. Marxian
- Which of the following is the slope of the consumption function? a. 45 degree line b. marginal propensity to consume c. marginal propensity to save d. autonomous consumption C = 30 + 7/8 GDP I = 100 G = 80 X = 20 M = 1/8 GDP
- What is the equilibrium level of income in this model? a. 920 b. 1840 c. 230 d. 460
- Suppose autonomous consumption rises by 20. The new equilibrium will be a. 1000 b. 80 c. 1020 c. 1920
- In the Marxian framework profits depend on a. keeping wages low b. keeping effort high c. keeping work organization in the hands of management d. all of the above
- When the labour pool fills up a. wages rise b. wages fall c. profits go down d. layoffs increase
- The Marxian solution to unemployment breaks the link between a. hiring more workers and wages rising b. falling profits and layoffs c. layoffs and falling wages d. falling wages and rising profits
- Money is a creature of the state is the position of a. monetarism b. Keynesianism c. Chartalism d. barter theory
- Which of the following doesn’t rise in the expansionary phase of the Marxian business cycle. a. wages b. effort c. raw materials prices d. interest rates
- As income rises a. average propensity to consume falls b. average propensity to consume rises c. debt falls d. inflation falls
- The Marxian theory of the business cycle revolves around the movement of a. demand b. the money supply c. profits d.debt levels
- One criticism of neoclassical trade theory is that it is based on unrealistic assumptions. These assumptions include all of the following except a. perfect information b. widespread unemployment c. no monopoly power d. no transport costs
- “The play of forces in the market normally tends to increase, rather than to decrease the inequalities between regions.” This statement is consistent with a. institutional development theory b. cumulative causation c. import substitution policies d. all of the above
- Kuznets believed “The transformation of an underdeveloped into a developed country is not merely the mechanical addition of a stock of physical capital; it is a thoroughgoing revolution in ...” a. the level of technical expertise of the population. b. the patterns of life c. the level of population d. the level of integration into the global economy
- According to dependency theory local elites tend not to invest in a. land b. speculation c. manufacturing d. speculation
- Low wages in the underdeveloped world plus competition a. low prices b. unfavourable terms of trade c. import substitution d. both a. and b.
- According to Marxian development theory, the main problem is a. surplus drain b. low wages c. cultural imperialism d. lack of infrastructure
- In the world view of ecological economics a. the ecosystem is embedded in the economy b. the economy is embedded in the ecosystem c. the economy is a growing part of the ecosystem d. both b. and c.
- According to ecological economics which of the following is NOT a problem with standard economics. a. it assumes perfect substitutability of factors of production. b. it ignores positive and negative externalities c. it assumes tastes and preferences are fixed and given d. it ignores direct and non-marketed contributions to human welfare
- Ecological services are contributed by a. natural capital b. human capital c. social capital d. manufactured capital 4 8. “For the first time nature becomes purely an object for humankind, purely a matter of utility; ceases to be recognized as power for itself “ under a. capitalism b. imperialism c. industrialism d. feudalism
- Unfortunately for the environment, under capitalism growth is a. optional b. inherent c. intermittent d. uncertain
- According to the Marxian approach to environmental problems, the situation is hard to change because a. people are selfish b. science is insufficiently advanced c. surplus is deployed to maintain growth and free access to environmental services d. it is just too late
