midterm 1 - University of California Riverside Econ 103A...

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1 University of California, Riverside Econ 103A Macroeconomic Theory Winter 2008 Solutions to Midterm Exam #1 Multiple-Choice Questions [2 points each] 1. Which of the following statements is correct ? Capital goods are counted in GDP, intermediate goods are not. 2. Suppose C =500, I = 100, NX = -20, NFP = 30 and GNP = 1500. What is G ? 1500 – 30 – 500 – 100 + 20 3. Which of the following statements about real interest rate is correct ? Real interest rate measures the rate at which the purchasing power of an asset changes over time. 4. Holding labor (N) and capital (K) constant, an increase in productivity (A) raises the marginal product of capital. 5. Suppose the size of the adult population is 800 million, 82% of the adult population is in the labor force and 96% of the labor force is employed. How many adults are unemployed ? 800 million x 82% x (100% - 96%)
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2 6. When there is a permanent increase in real wage, income effect dominates according to the existing studies. 7. Which of the following statements about an increase in real wage is correct ? The substitution effect would encourage workers to supply more labor. 8. Suppose point B is the optimal choice. Which of the following statements is incorrect ? Comparing to point D, A gives a higher level of happiness because the consumer can
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This homework help was uploaded on 04/16/2008 for the course ECON 103a taught by Professor Suen during the Winter '08 term at UC Riverside.

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midterm 1 - University of California Riverside Econ 103A...

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