1) A country's unemployment rate fell from 6% to 5% during a year

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1) A country's unemployment rate fell from 6% to 5% during a year. If its total population, capital stock and output remain unchanged, _.

a) its income per worker will fall

b) its income per capita will increase

c) its income per capita will fall

d) its income per worker will increase

2) Which of the following is an example of a physical capital in agricultural production?

a) A farmer

b) A tractor

c) A road

d) A common canal

3) Suppose the price of an iPad is $500 in the U.S, and 30,000 rupees in India. If an iPad is representative of average prices within a country, then the price of a basket of goods worth $1 in the U.S. costs? _.

a) 2 rupees in India

b) 60 rupees in India.

c) 0.17 rupees in India

d) 100 rupees in India

4) The average number of years of schooling of workers in Argonia has increased. Which of the following is likely to be true if all other variables remain unchanged?

a) The aggregate price level in Argonia is likely to decrease.

b) The unemployment rate in Argonia is likely to increase.

c) The income per worker in Argonia is likely to decrease.

d) The efficiency units of labor in Argonia is likely to increase.

5) In 2011, China revised its poverty line upward to 2,300 yuan per year, or 6.3 yuan per day. At the prevailing exchange rate, this was equal to a little less than a single U.S. dollar. Some commentators felt that China's poverty line fell short of the World Bank's poverty line of $1.25 per day, in 2005 purchasing power parity, (PPP), U.S. dollars. Would you agree?

a) Yes, since both values are adjusted by the prevailing exchange rate.

b) Yes, since it is important to measure poverty between countries so that action can be taken.

c) No, since the Chinese poverty measure is not stated in 2005 PPP U.S. dollars.

d) No, since it is not a good comparison to measure Chinese poverty against the world.

6) If the income per capita of United Kingdom is pound 23,800 and dollar/pound exchange rate (US$/pound) is 1.68 in 2014, the income per capita of UK in US dollars in the same year is_.

a) $12,812

b) $30,400

c) $22,829

d) $39,984

7) Country X and Country Y have identical aggregate production functions. The amount of capital stock available to each country is also equal. However, Country X has LX amount of labor supply while Country Y has LY amount of labor supply. A one unit increase in labor supply will lead to _ in output in Country X than in Country Y.

a) a smaller decrease

b) a larger decrease

c) a larger increase

d) a smaller increase

8) The price of a given basket of goods in Country 1 is 10 karls. The price of the same basket of goods in Country 2 is 25 ritz and $2 in the U.S. Country 1 has a income per capita of 3,200 karls and Country 2 has a income per capita of 5,500 ritz. Refer to the scenario above. A basket of goods worth $1 in the U.S. has a price of _ in Country 2.

a) 320 ritz

b) 50 ritz

c) 25 ritz

d) 12.5 ritz

9) Suppose a country's labor supply increases in a year while its capital stock remains constant. Which of the following is likely to happen in this case if output is a function of capital and total efficiency units of labor?

a) Its total output will decrease.

b) Its total output will remain constant.

c) Its total output will increase.

d) Its output per capita will decrease.

10) Which of the following is true?

a) The income per worker of a country increases when the amount of capital available in the country diminishes.

b) The income per capita of a country increases when there is an increase in the number of workers.

c) The income per worker of a country is higher than its income per capita.

d) The income per worker of a country is lower than its income per capita.

11) An international agency uses the prices of iPads in different countries to compute the exchange rate between the currencies of these countries. Which of the following measures is based on a similar idea?

a) The GDP deflator

b) The Human Development Index

c) The Big Mac Index

d) The midcap index