Question 1The forecasting technique which attempts to forecast short-run changes and makes use of economic indicators known as leading, coincident or lagging indicators is known as:econometric techniquetime-series forecastingopinion pollingbarometric techniquejudgment forecastingQuestion 2If two alternative economic models are offered, other things equal, we wouldtend to pick the one with the lowest the model that is the most expensive to estimate.pick the model that was the most the model that gave the most accurate forecastsQuestion 3The variation in an economic time-series which is caused by major expansions or contractions usually of greater than a year in duration is known as:secular trendcyclical variationseasonal effectunpredictable random factorQuestion 4Consumer expenditure plans is an example of a forecasting method. Which of the general categories best described this example?time-series forecasting techniquesbarometric techniquessurvey techniques and opinion pollingeconometric techniquesinput-output analysisQuestion 5The type of economic indicator that can best be used for business forecasting is the:leading indicatorcoincident indicatorlagging indicatorcurrent business inventory indicatoroptimism/pessimism indicatorQuestion 6The use of quarterly data to develop the forecasting model Yt = a +bYt?1 is an example of which forecasting technique?Barometric forecastingTime-series forecastingSurvey and opinionEconometric methods based on an understanding of the underlying economic variables involvedInput-output analysisQuestion 7Purchasing power parity or PPP says the ratios composed of:interest rates explain the direction of exchange rates.growth rates explain the direction of exchange rates.inflation rates explain the direction of exchange explain the direction exchange rates.public opinion polls explain the direction of exchange rates.Question 8If Ben Bernanke, Chair of the Federal Reserve Board, begins to tighten monetary policy by raising US interest rates next year, what is the likely impact on the value of the dollar?The value of the dollar falls when US interest rates rise.The value of the dollar rises when US interest rates rise.The value of the dollar is not related to US interest rates.This is known as Purchasing Power Parity or PPP.Question 9If the British pound (?) appreciates by 10% against the dollar:both the US importers from Britain and US exporters to Britain will be helped by the appreciating pound.the US exporters will find it harder to sell to foreign customers in Britain.the US importer of British goods will tend to find that their cost of goods rises, hurting its bottom line.both US importers of British goods and exporters to Britain will be unaffected by changes in foreign exchange rates.Question 10Trading partners should specialize in producing goods in accordance with comparative advantage, then trade and diversify in consumption becauseout-of-pocket costs of production declinefree trade areas protect infant industrieseconomies of scale are presentmanufacturers face diminishing returnsmore goods are available for consumptionQuestion 11Using demand and supply curves for the Japanese yen based on the $/¥ price for yen, an increase in US INFLATION RATES wouldDecrease the demand for yen and decrease the supply of the yen. Increase the demand for yen and decrease the supply of the yen.Increase the demand and increase the supply of yen.Decrease both the supply and the demand of yen.Have no impact on the demand or supply of the yen.Question 12An increase in the exchange rate of the U.S. dollar relative to a trading partner can result fromhigher anticipated costs of production in the U.S.higher interest rates and higher inflation in the U.S.higher growth rates in the trading partner’s economya change in the terms of tradelower export industry productivityQuestion 13The purchasing power parity hypothesis implies that an increase in inflation in one country relative to another will over a long period of timeincrease exportsreduce the competitive pressure on priceslower the value of the currency in the country with the higher inflation rateincrease foreign aidincrease the speculative demand for the currencyQuestion 14The isoquants for inputs that are perfect substitutes for one another consist of a series of:right anglesparallel linesconcentric circlesright trianglesQuestion 15Marginal factor cost is defined as the amount that an additional unit of the variable input adds to ____.marginal costvariable costmarginal rate of technical substitutiontotal costQuestion 16The combinations of inputs costing a constant C dollars is called:an isocost linean isoquant curvethe MRTSan isorevenue lineQuestion 17Given a Cobb-Douglas production function estimate of .72K.18 for a given industry, this industry would have:increasing returns to scaleconstant returns to scaledecreasing returns to scalenegative returns to scaleQuestion 18Which of the following is never negative?marginal productaverage productproduction elasticitymarginal rate of technical substitutionslope of the isocost linesQuestion 19The primary purpose of the Cobb-Douglas power function is to:allow one to make estimates of cost-output relationshipsallow one to make predictions about a resulting increase in output for a given increase in the inputsaid one in gaining accurate empirical values for economic variablescalculate a short-run linear total cost functionQuestion 20According to the theory of cost, specialization in the use of variable resources in the short-run results initially in:decreasing returns and declining average and marginal costsincreasing returns and declining average and marginal costsincreasing returns and increasing average and marginal costsdecreasing returns and increasing average and marginal costsQuestion 21What method of inventory valuation should be used for economic decision-making problems?book valueoriginal costcurrent replacement costcost or market, whichever is lowerhistorical costQuestion 22For a short-run cost function which of the following statements is (are) not true?The average fixed cost function is monotonically decreasing.The marginal cost function intersects the average fixed cost function where the average variable cost function is a minimum.The marginal cost function intersects the average variable cost function where the average variable cost function is a minimum.The marginal cost function intersects the average total cost function where the average total cost function is a minimum.Question 23The existence of diseconomies of scale (size) for the firm is hypothesized to result from:transportation costsimperfections in the labor marketimperfections in the capital marketsproblems of coordination and control encountered by managementQuestion 24Economies of Scope refers to situations where per unit costs are:Unaffected when two or more products are producedReduced when two or more products are producedIncreased when two or more products are producedDemonstrating constant returns to scaleDemonstrating decreasing returns to scaleQuestion 25The cost function is:a means for expressing output as a function of costa schedule or mathematical relationship showing the total cost of producing various quantities of outputsimilar to a profit and loss statementincapable in being developed from statistical regression analysis

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