University of British Columbia Econ 302 Summer 2013 Final Instructor: Alfred Kong Name: Student Number: Total: 60 Points Instructions: This exam contains two parts and is 120 minutes long. Part A has 10 short answer questions, and Part B has 3 long questions. You are required to answer all questions in the exam. Good luck! Part A. Each question is worth 3 points. a) Discuss the impact of an increase in the tax rate on the growth rate of output per worker in the Barro growth model.
b) Compare the output per worker and also the growth rate of output per worker in China and in Canada at the steady state according to the concept of absolute convergence.
c) According to the Quantity Theory of Money, comment on the following sentence: “In order for the Bank of Canada to keep inflation stable at 2% per year, the growth rate of money supply should be set equal to the growth rate of real output”. Assume the velocity of money is constant.