Economics Economics Exam 1. What is the main difference between an asymmetric auction and a symmetric auction? In an asymmetric auction, the seller has more information about the value of the good or service being auctioned than the buyers, while in a symmetric auction, all participants have the same information. In an asymmetric auction, the seller has a higher valuation of the good or service being auctioned than the buyers, while in a symmetric auction, all participants have the same valuation. In an asymmetric auction, the seller is able to set the minimum bid, while in a symmetric auction, the buyers are able to set the minimum bid. In an asymmetric auction, the seller is able to choose the winner of the auction, while in a symmetric auction, the highest bidder wins the auction. 2. What is the main difference between a strategic firm and a non-strategic firm? A strategic firm considers the actions of its competitors, while a non-strategic firm does not. A strategic firm maximizes its profits in the short run, while a non-strategic firm maximizes its profits in the long run. A strategic firm has a market share of at least 50%, while a non-strategic firm has a market share of less than 50%. A strategic firm is a monopoly, while a non-strategic firm is a perfectly competitive firm. 3. What is the difference between monetary policy and fiscal policy? Monetary policy is the use of interest rates and the money supply to influence the economy, while fiscal policy is the use of government spending and taxation to influence the economy. Monetary policy is the use of interest rates and the money supply to influence the prices of goods and services, while fiscal policy is the use of government spending and taxation to influence the quantity of goods and services produced. Monetary policy is the use of interest rates and the money supply to influence the aggregate demand for goods and services, while fiscal policy is the use of government spending and taxation to influence the aggregate supply of goods and services. Monetary policy is the use of interest rates and the money supply to influence the government's budget, while fiscal policy is the use of government spending and taxation to influence the central bank's balance sheet. 4. What is the difference between an instrumental variables (IV) estimator and a two-stage least squares (2SLS) estimator? An IV estimator is used to estimate the causal effect of an endogenous variable on an outcome variable, while a 2SLS estimator is used to estimate the causal effect of an exogenous variable on an outcome variable. An IV estimator is used to estimate the causal effect of an exogenous variable on an outcome variable, while a 2SLS estimator is used to estimate the causal effect of an endogenous variable on an outcome variable. An IV estimator is a two-stage estimator, while a 2SLS estimator is a one-stage estimator. An IV estimator is a one-stage estimator, while a 2SLS estimator is a two-stage estimator. 5. hat is the purpose of a confidence interval? To estimate the range of values within which the true population parameter is likely to lie. To test the significance of a relationship between two or more variables. To forecast future values of a variable. To describe the relationship between two or more variables. 6. What is the benefit of international trade? It allows countries to specialize in producing goods and services that they are good at producing and to import goods and services that they are not good at producing. It allows countries to increase their GDP. It allows countries to lower their tariffs. It allows countries to increase their exchange rate. 7. What is the equilibrium price and quantity? The equilibrium price and quantity are the price and quantity at which the quantity demanded of a good is equal to the quantity supplied of that good. The equilibrium price and quantity are the price and quantity at which the quantity demanded of a good is greater than the quantity supplied of that good. The equilibrium price and quantity are the price and quantity at which the quantity demanded of a good is less than the quantity supplied of that good. There is no such thing as equilibrium price and quantity. 8. If the government increases government spending by $100 billion, and the multiplier is 2, what is the expected increase in real GDP? $100 billion $200 billion $300 billion $400 billion 9. If the money supply increases by 10% and the velocity of money remains constant, what is the expected rate of inflation? 10% 5% 20% Cannot be determined 10. What is the difference between a tariff and a non-tariff barrier to trade? A tariff is a tax on imports. A non-tariff barrier to trade is any measure that restricts or discourages imports without imposing a tariff. A tariff is a tax on goods and services that are produced domestically. A non-tariff barrier to trade is any measure that restricts or discourages the production of goods and services domestically. 11. What is the study of how individuals and firms make decisions under conditions of scarcity? Microeconomics Macroeconomics Development economics International economics 12. Suppose the demand for a good is given by the equation Qd = 10 - 2P, and the supply for the good is given by the equation Qs = 2P. What is the equilibrium price and quantity? P = 2, Q = 6 P = 3, Q = 4 P = 4, Q = 2 P = 5, Q = 0 13. What is the difference between nominal GDP and real GDP? Nominal GDP is measured in current prices, while real GDP is measured in constant prices. Nominal GDP is higher than real GDP, while real GDP is higher than nominal GDP. Nominal GDP is the sum of the nominal values of all final goods and services produced in a country in a given year, while real GDP is the sum of the real values of all final goods and services produced in a country in a given year. All of the above. 14. A firm's production function is given by Q(K, L) = K^1/2 L^1/2, where K is capital and L is labor. What is the firm's marginal product of labor when K = 100 and L = 100? 5 10 15 20 15. If the natural rate of unemployment is 5% and the actual unemployment rate is 7%, what is the unemployment gap? 2% 3% 5% 7% 16. What is the law of demand? The quantity demanded of a good increases as its price decreases. The quantity demanded of a good decreases as its price increases. The quantity demanded of a good is unrelated to its price. The quantity demanded of a good is inversely proportional to its price. 17. What is the relationship between the exchange rate and the current account? A depreciation of the exchange rate will lead to an improvement in the current account. An appreciation of the exchange rate will lead to an improvement in the current account. A depreciation of the exchange rate will lead to a deterioration in the current account. An appreciation of the exchange rate will lead to a deterioration in the current account. 18. Which of the following is NOT a key ethical consideration in development planning and project analysis? The potential impact of the project on marginalized groups The need for transparency and accountability in the planning and implementation process The importance of informed consent from stakeholders The need to prioritize profit over social and environmental considerations 19. Which of the following is a tool that can be used to identify and assess the potential risks to a development project? Cost-benefit analysis Social impact assessment Risk analysis Sensitivity analysis 20. What is the difference between a panel data model and a time series model? A panel data model has multiple cross-sections and multiple time periods, while a time series model has only one cross-section and multiple time periods. A panel data model has multiple cross-sections and one time period, while a time series model has one cross-section and multiple time periods. A panel data model has one cross-section and one time period, while a time series model has multiple cross-sections and multiple time periods. A panel data model has only one cross-section and one time period, while a time series model has multiple cross-sections and one time period. 21. A consumer's utility function is given by U(x) = x^2, where x is the quantity of a good consumed. What is the consumer's marginal utility from consuming the 10th unit of the good? 20 10 1 0 22. What is the difference between a difference-in-differences (DID) estimator and a regression discontinuity (RD) estimator? A DID estimator is used to estimate the causal effect of a policy change on an outcome variable, while an RD estimator is used to estimate the causal effect of a continuous variable on an outcome variable. A DID estimator is used to estimate the causal effect of a continuous variable on an outcome variable, while an RD estimator is used to estimate the causal effect of a policy change on an outcome variable. A DID estimator is a two-stage estimator, while an RD estimator is a one-stage estimator. An RD estimator is a two-stage estimator, while a DID estimator is a one-stage estimator. 23. Suppose you have a simple linear regression model with the following estimated equation: Y = 10 + 2X where Y is the dependent variable and X is the independent variable. If you observe a value of X = 5, what is the predicted value of Y? 10 15 20 25 24. What is the law of demand? e law of demand states that the quantity demanded of a good or service is inversely proportional to its price, ceteris paribus. The law of demand states that the quantity demanded of a good or service is directly proportional to its price, ceteris paribus. The law of demand states that the quantity demanded of a good or service is independent of its price, ceteris paribus. None of the above. 25. If the price of a good in the United States is $10 and the price of the same good in China is $5, what is the absolute advantage of the United States? 5 10 15 20 26. What is the Phillips curve? The Phillips curve is a graph that shows the relationship between the unemployment rate and the inflation rate. The Phillips curve is a graph that shows the relationship between the interest rate and the unemployment rate. The Phillips curve is a graph that shows the relationship between the price level and the money supply. None of the above. 1 out of 1 Time is Up! Time's up
