ECN201 Exam 2
Fall 2014 V1
1. Which country has fallen below the replacement-level fertility rate?
a. Nigeria
b. US
c. Saudi Arabia
d. Japan
2. Let's assume for a moment that a survey has been conducted that clearly shows a negative relationship between cigarette smoking and
income - the higher the income the lower the lower the chance someone would be smoking. Based on this result you would be able to
conclude that:
a. A tax on cigarettes is regressive
b. A tax on cigarettes is progressive
c. A tax on cigarettes is proportional
d. there is no way to know the relationship between a tax on cigarettes and income
3. One of my colleagues used to rant about 'terrorist vehicles," the name he gave to SUVs. He called them this because he felt that the $s
going to fill up those gas tanks put $s into the hands of potential terrorists. His goal was to get his students out of those SUVs, and this
strategy was focused on ____ incentives.
a. social
b. economic
c. moral
d. Bayesian
4. In the Fall of 2003 URI's administrators announced a decision to raise the university's enrollment by 1,000 students and add 20 fulltime faculty members. Based on this data which additional information would I need to calculate the marginal cost of another student?
a. the tuition that would be paid by the additional students
b. the value of fixed costs at the university
c. the salary of the additional faculty
d. the existing size of the university's student body
5. Which of these headlines would you not expect based on existing demographic data?
a. "India is set to pass China as the world's most populous country"
b. "Japan’s population growth rate inches past that of the US"
c.
“Africa’s share of the world’s population increasing”
d. "The poor shall inhabit the earth - or at least they will account for nearly all of the world’s expected population growth"
6. What was the surprise that was at the center of the “Why vote?” article?
a. Why the vote of young people is so low
b. Why the vote of old people is so high
c. Why rural people are less likely to vote than urban people
d. Why internet voting did not increase voter participation rates
7. Which is the closest approximation to the share of the country’s population growth in the 2000-2010 decade that was in the
West and South regions?
a. 55%
b. 65%
c. 75%
d. 85%
8. Which of the following would NOT be one of the factors identified as a possible reason for the change in buying patterns of
millennials – especially their purchase of homes and cars?
a. Preference for urban living reduces demand for cars
b. Higher price of gas discourages car buying
c. Earlier age at first marriage reduces demand for homes
d. Income losses in the Great Recession reduced demand for cars
9. If I were interested in knowing if a country was on the verge of bankruptcy, I would be primarily interested in___.
a. Debt /Budget deficit
b. Budget deficit/Tax revenues
c. Budget deficit/ Government spending
d. Debt/GDP
Country A
Country B
10. Which of the following statements is correct based on the two population-pyramid diagrams above?
a. Country B is likely to be a developed country
b. Country A has a lower birth rate
c. Country B is likely have an impending pension crisis
d. In Country A life expectancies are shorter
11. Which of the following would be an example of the use of social incentives in designing public policies?
a. posting pictures of convicted "johns" on police web pages to reduce prostitution
b. the linking of SUV ownership with the funding of terrorism in the Middle East to reduce energy consumption
c. the imposition of a gas guzzler tax where you pay a higher sales tax rate on your car if the gas mileage is low
d. advertising the negative implications of second hand smoking on the health of others
12. So you want to be an entrepreneur and start your own company. It is not a bad idea in this "flattening" world, but you need to know
how to do it. If you have already raised the initial funds and now want to become a corporation and conduct an IPO to sell stock in your
company, you would need to talk to ___.
a. commercial banks
b. pension companies
c. head of the New York Stock Exchange
d. investment banks
13. Which of the following is true when we look at the demographic data in the US?
a. The fastest growing region in the US is the Midwest
b. Asians are projected to have the biggest share of growth among racial and ethnic groups
c. Hispanics are projected to have the fastest growth rate among racial and ethnic groups
d. Population growth in New England lags behind the national average
14. Which of the following is true about federal finances?
a. the borrowing of the US government, as measured by the deficit/GDP ratio, was highest in the 1980s
b. the borrowing of the US government, as measured by the deficit was highest in the 2000s
c. the budget deficit tended to decline in the early 1980s as a result of Reagan's supply-side tax cuts
d. the budget deficit tended to decline in the early 2000s as a result of Bush' tax cuts
15. Which of the following statements is true based on the rational choice theory of individual choice?
a. ‘no-fault’ divorce decreases the divorce rate
b. the end of the draft meant more anti war protests during Iraq War than the Vietnam War
c. a death rate among Iraq War soldiers who lived in urban counties was nearly twice that of those who lived in rural counties.
d. The growth of 3rd-party payments in medicine be a major factor contributing to rising health care costs
16. Which of the following statements is true?
a. The progressivity of all federal taxes in the US has increased in the past decade
b. property taxes would be more regressive if the first $200,000 of a property’s value was not taxed
c. consumption taxes would be less regressive if annual consumption taxes were capped at a certain level
d. overall taxes would be less regressive if some of the tax burden was shifted from the sales tax to the income tax
17. In this time-series graph we see that the fertility
rate declined far faster in China and South Korea
than in the other countries. Which of the following
would not be a possible explanation for the rapid
decline in China?
a.
b.
c.
d.
Urbanization was faster in China
Industrialization was faster in China
Income growth was faster in China
Urban to rural migration was faster in China
Use this info to answer the next two questions.
RIU’s administration is considering increasing enrollment by 1,100 students who would pay an average tuition of $10,000 and adding 25
full-time faculty members who would be paid $80,000.
18. Based on this data, what is the marginal revenue of an additional faculty member? (closest approximation)
a. $10,000
b. $80,000
c. $160,000
d. $440,000
e. $630,000
19. Based on this data, what is the marginal cost of an additional faculty member? (closest approximation)
a. $10,000
b. $80,000
c. $160,000
d. $440,000
e. $630,000
20. Which of the following statements is true when we examine the finances of the federal government? (Be careful here with the
difference between level and share)
a. at the federal level there has been a substantial increase in entitlement spending
b. one of the biggest components of discretionary federal spending is Social Security
c. defense spending represents the largest share of the federal government's nondiscretionary spending
d. the growth of entitlements shows up in the growth of discretionary spending
21. Frank Deford in his Honors Colloquium speech talked about the theory of unintended consequences, which refers to the fact that the
impact of many public policies has produced surprising side-effects. If you think carefully about the implications of policies using the
rational choice framework, however, you are less likely to be surprised because many of the effects are easily predictable. Which of the
following expected reactions to a public policy would be an example of an unintended consequence that could be explained by the
rational-choice model of decision-making?
a. lower number of travel-related child deaths as a result of required child seats on airplanes
b. decreased municipal solid waste disposal costs for towns as a result of substantially higher trash pick-up fees
c. lower crime rates as a result of passage of Roe v. Wade
d. decreased demand for prescription drugs as a result of growth of 3rd party medical insurance
Given your success as a consultant, let’s try another job. This time your job is to provide help to a local toy manufacturer by answering
the following two questions. How should you respond to the following situation? The managers are considering the offer from an out-ofstate business to buy an additional thousand Buzz Lightsecond toys at a fixed price of $6 per toy. What we know is that this is $2 below
the current price of the toys. We also know the firm is currently producing 100,000, units at an average cost of $7 and costs will rise by
$800 for every increase in production of 100.
22. What is the MR of the deal?
a. $8
b. $6
c. $4
d. $2
23. Should the company make the deal?
a. Yes
b. No
c. Not enough info to determine this
24. There are some parallels between individual finances and the finances of government. If you heard your parents complain, “I can’t
believe John is borrowing $15,000,” which measure of the government’s finances are they commenting on?
a. Discretionary spending
b. National debt
c. Budget deficit/GDP
d. Budget deficit
25. People have strong feelings about government as you can see in the quote. "For ______, a government that's not mortgaged to the hilt
poses too great a threat of social activism. That's why, in 2001 and again this year, the Bush administration has launched pre-emptive
attacks on the national treasury designed to leave the U.S. government so deep in debt it poses no threat to the conservative status quo. Its
motto is: Stop government before it can help again." Fill in the blank.
a. liberals
b. institutionalists
c. Marxists
d. conservatives
Use the following info to answer the next two questions.
26. What will be the fixed cost if I plan to have 150 people?
a. $2,900
b. $1,900
c. $900
d. $55
27. What will be the marginal cost of adding a guest?
a. $160
b. $104
c. $86
d. $55
28. Here is a graph of the demographic transition we looked at in
class. Based on this graph, in which time periods has the
population growth transitioned from rapid growth to slow growth?
a. I
b. II
c. III
d. IV