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final2007 - Econ 102 Macroeconomic Theory Winter 2007 Mark...

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Econ 102 Mark L.J. Wright Macroeconomic Theory [email protected] Winter 2007 Bunche 9284 Final Exam Date: Monday 19th March, 2007 Instructions 1. Answer each part of the exam in a separate blue book. 2. Write your name, student number, TA section and the part attempted on the front page of each blue book that you use. 3. Write your answers in permanent ink. Answers submitted in pencil, or in erasable ink, are not eligible for regrade requests. 4. You have one hundred and eighty (180) minutes to answer this exam. 5. The exam has °ve (5) pages. Please check that you have all pages. 6. There are one hundred and eighty (180) points worth of questions. Answer all questions. 7. This is a ±closed book²exam. You may not consult your notes or textbooks during the exam. 8. No calculators are to be used on the exam. 9. You may not talk to any other student while completing the exam. Exam answers are to be completed, and handed in, individually. 10. Professor Wright will be available to answer questions during the °rst ten minutes of the exam. If you are confused about a question on the exam after the °rst ten minutes, explain why you are confused in your answer, state what you think is necessary to resolve your confusion, and then proceed to answer the question accordingly. 1
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Part A (Short Answer Questions) (54 points total) Evaluate each of the following statements. State whether they are true, false or uncertain, and give a short explanation of your reasoning. No points will be awarded without the correct explanation. 1. If United Airlines buys a used Boeing 747 from American Airlines, the level of US GDP is unchanged. However, if it bought the airplane from British Airways, the level of US GDP would increase. (6 points) 2. Assume that people only value (and care about) the goods they can purchase in the market. Then if a Paasche index for real GDP is greater than one, we can conclude with absolute certainty that living standards in this country have risen. (6 points) 3. According to the Solow-Swan growth model, if two countries are identical in every respect except that one has a higher depreciation rate, that country will have lower levels of per capita output and welfare, and a lower rate of output growth. (6 points) 4. According to the New Growth model, if two countries begin identical in every respect except
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