MINISTRY OF EDUCATION AND TRAINING Mid-Term Test

NATIONAL ECONOMICS UNIVERSITY

Economics for Investment Decision Makers
Course Code:DTKT1119E(123)CLC Intake: 64
FACULTY: INVESTMENT Date: 12/4/2024
Department: Economics of Investment Time: 90 minutes

1, Inventories will often fall early in a recovery because:

A, sales outstrip production
B, businesses need profit
C, businesses ramp up production because of increase economic activity

2, Factors limiting growth include:

A, Low rate of saving and Investment; Political instability; Poor public education
B, Poorly developed financial market; Weak legal system; Lack of property rights.
C, All of above are true

3, Suppose you are interested in forecasting earnings growth for a company active in a country
where no official business cycle dating committee exists. Which variables would you consider in
estimating peaks and troughs of that countries's business cycle ?
A, Inflation, the central bank's discount rate, unemployment
B, DJIA, eqity market book value, monetary base
C, GDP growth, unemployment, inflation, indutrial production

4, Classical model:
A, is focused on the impact of a growing population in a world with limited resources.
B, is focused on the link between per capita income and population broke down.
C, state that growth in per capita income has been possible because technological
progress.

5, Though a small part of the overall economy, inventories can reflect growth significantly
because they:
A, reflect general business sentiment
B, tend to move forcefully up or down
C, determine the avalability of goods for sale

6, Monetary policy impact on investment:

A, Impact on investment because of changing in cashflow
B, Impact on investment because of changing in interest rate. Interest rate go down,
investment go up.
C, All of above are true

7, Inventories tend to rise when:

A, invetory-to-sales ratios are low
B, inventory-to-sales ratio are high
C, economic activity begins to rebound

8, Shortcomings of fiscal policy:

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 A, Policy lag; It is difficult to measure economic indicators accurately, inefficiency of
public projects
B, Action lag and impact lag
C, Fiscal policy are implemented by public projects and many public project were
efficiency.

9, Durable goods have the most pronouned cyclical behavior because:

A, their purchase can not be delayed
B, they have longer useful life
C, they are needed more than nondurable goods or service

10, Implications of the Noeclassical Model:

A, A growing economy will move to a point of steady growth
B, Capital accumulation affects the level of output but not the growth rate in the long run.
C, The growth rate of output does not depend on the rate of business investment

11, Permanent income provides a better guide to:

A, saving rate
B, spending on services
C, spending on durable goods

12, Absolute convergence:

A, means that convergence is conditional on the countries having the same rate,
population rate and production function.
B, means that only rich and middle-income countries are converging to the income level
of the richest countries in the world.
C, means that developing countries, regardless of their particular characteristics, will
eventually catch up with the developed countries and match them in per capita output.

13, Productivity offers perspective on the business cycle by

A, showing the need for new employees
B, assessing the skill set of existing employees
C, measuring the intensity of work flow for existing employees

14, If the economy's trend GDP growth rate is 3% and its central bank has a 2 percent inflation
target, which policy rate is most consistent with an expansionary monetary policy ?
A, 4%
B, 5%
C, 6%
15, An increase in a Central Bank's policy rate might be expected to reduce inflationary
pressures by:
A, reducing consumer demand
B, reducing the foreign exchange value of the currency
C, driving up asset prices, leading to an increase in personal sector wealth

16, Which of the following statements best describe a fundamental limitation of monetary policy
? monetary policy is limited because central bankers:
A, can not control the inflation rate perfectly
B, are appointed by pliticians and are therefore never truly independent
C, can not control the amount of money that economic agents put in banks, not the
willingness of banks to make loans

17, If fiscal policy is easy and monetary policy tight, then:

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 A, interest rates would tend to fall, reinforcing the fiscal policy stance.
B, the government sector would tend to expand as a proportion of total GDP
C, The government sector would tend to shrink

18, Which of the following is not a tool of fiscal policy:

A, a rise in social transfer payments
B, The purchase of new equipment for the armed forces
C, The increase in deposit requirements for the buying of houses

19, Which of the following is the most likely a reason to not use fiscal deficits as an
expansionary tools ?
A, They may stimulate employment when the is unemployment in an economy
B, They may facilitate tax changes to reduce distortions in an economy
C, They may crowd out private investment

20, The opportunity cost of any action is

A, the time required but not the monetary cost.
B, all the possible alternatives forgone.
C, the highest-valued alternative forgone.

21, In the market economy

A, Demand determines supply and supply, in return, determines prices
B, Supply determines demand and demand, in return, determines prices
C, Supply and demand determine prices and prices, in turn, allocate the economy’s scarce
resources.

22, If demand is price inelastic, then

A, buyers do not respond much to a change in price
B, buyers respond substantially to a change in price, but the response is very slow
C, buyers do not respond much to advertising, fads, or general changes in tastes.
the demand curve is very flat.

23, For a monopoly firm, which of the following equalities is always true?
A, Price = average revenue
B, Price = marginal revenue
C, Marginal revenue = marginal cost
24, Mai knows she has maximized her utility, because she is on her budget constraint and:
A, Consumption of good X equals consumption of good Y.
B, What is spent on good X equals what is spent on good Y.
C, MUx/Px = MUy/Py.

25, Price elasticity of demand is a measure of the responsiveness of quantity demanded to

changes in:
A, interest rates.
B, price.
C, supply.
26, Suppose that when the price of a good rises from $12 to $14, the quantity demanded of that
good falls from 220 units to 180 units. What is the approximate price elasticity of demand
between these two prices?
A, 1.30
B, 0.77
C, 1.73

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27, If quantity demanded is completely unresponsive to changes in the price of good X, then
demand for good X is
A, unit elastic
B, elastic.
C, perfectly inelastic.

28, Which of the following would result in higher price elasticity of good X?
A, More substitutes for good X
B, A shorter period of time has passed since the change in the price of good X
C, Lower costs of labor in the production of good X
29, If the cross elasticity of demand for good A with respect to good B is -2.7, then good A is:
A, an inferior good.
B, a substitute for good B.
C, a complement to good B

30, Income elasticity of demand for a normal good is always

A, less than zero.
B, greater than zero.
C, equal to zero.

31, A normal good is:

A, any good for which other goods can substitute.
B, a good for which the demand rises as income falls.
C, a good for which the demand rises as income rises

32, An inferior good is:

A, any good that consumers think is of low quality.
B, a good for which the quantity demanded increases as its price decreases.
C, a good for which the demand rises as income falls.
33, If the market demand curve for a commodity has a negative slope the the market structure
must be:
A, The market structure cannot be determined from the information given
B, Perfect competition
C, Monopoly

34, Marginal revenue is equal to price for which one of the following types of market structure?
A, Perfect competition
B, Monopolistic competition
C, Monopoly

35, A depreciation of the VND relative to foreign currencies will make

A, Foreign imports less expensive in Vietnam
B, Vietnam exports less expensive in foreign countries
C, The demand of Vietnam exports decrease

36, In the short run, a monopolist will shut down if it is producing a level of output where
marginal revenue is equal to short run marginal cost and price is
A, Less than average variable cost
B, Greater than average variable cost
C, Greater than average total cost

The Following information relates to questions 37 through 39 at different level of output:

Exhibit A
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Quantity (Q) Total Fixed costs (TFC) Total Variable Costs (TVC)
0 200 0
1 200 100
2 200 150
3 200 200
4 200 240
5 200 320

37, Refer to the data in Exhibit A. When quantity produced is equal to four units, the average
fixed cost (AFC) is closed to:
A, 50
B, 60
C, 110

38, Refer to the data in Exhibit A. When the firm increases production from 4 to 5 units, the
marginal cost (MC) is closest to:
A, 40
B, 64
C, 80

39, The level of unit production resulting in the lowest average total cost (ATC) is closest to:
A, 3
B, 4
C, 5

40, When total revenue is greater than total variable cost but less than total costs in the short term
a firm will most likely:
A, Exist the market
B, stay in the market
C, shut down production