Test 2A Answer Key

Test 2A Answer Key - 1 ANSWER KEY FOR TEST 2A APRIL, 2008...

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1 ANSWER KEY FOR TEST 2A APRIL, 2008 ECON 0110: MACROECONOMICS DR. KENKEL 20 questions worth 12.5 points each. Total Points = 250 1. Calculate the taxes due for a single person using the following data: Person is single, living alone Personal exemption deduction is $4,000 per person Standard deduction is $5,300 Gross income = $78,300 MARGINAL TAX RATES TAXABLE INCOME 10% $ 0 - $ 8,000 15% $ 8,000 - $ 22,000 25% $ 22,000 - $ 70,350 28% $ 70,350 - $146,750 a. Less than $10,000 b. Between $10,000 and $12,499.99 *c. Between $12,500 and $14,999.99 d. Between $15,000 and $16,499.99 e. $16,500 or more ANSWER: Taxable income = 78,300 – 4,000 – 5,300 = 69,000 .10 X 8,000 = 800 .15 X (22,000 – 8,000) = .15 X 14,000 = 2,100 .25 X (69,000 – 22,000) = .25 X 47,000 = 11,750 800 + 2,100 + 11,750 = 14,650 2. Assume the following data apply to a certain country: Year Consumer Nominal Price GDP Index (Trillions) 2005 128.9 12.1 2006 138.6 14.2 2007 149.5 17.5 During 2005, real GDP equals A. Less than 8.0 trillion b. 8.0 to less than 8.7 trillion *c. 8.7 to less than 9.9 trillion d. 9.9 to less than 11.8 trillion e. none of the above ANSWER: 100 X (12.1/128.9) = 9.387 3. When Bob’s disposable income is $26,000, his consumption spending is $15,000. Suppose his disposable income increases to $40,000. Suppose his marginal propensity to consume is .65. . His new consumption spending will be: *a. Less than $25,000 b. between $25,000 and $27,999 c. between $28,000 and $29,999 d. between $30,000 and $33,999 e. $34,000 or higher ANSWER: Change in spending = .65 x ($40,000 - $26,000) = .65 x $14,000 = $9,100 New consumption = $15,000 + $9,100 = $24,100
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2 4. Assume the following data apply to a certain country: Civilian Noninstitutional Population 210.0 million Employed 114.6 million Unemployed 7.8 million Not in Labor Force 87.6 million The unemployment rate is a. Less than 3.0% b. 3.0% to less than 5.0% c. 5.0% to less than 6.2% *d. 6.3% to less than 7.4% e. none of the above ANSWER: Labor force = 114.6 + 7.8 = 122.4. Unemp. Rate = 100% x (7.8/122.4) = 6.37% 5. Last year Joe earned $63,275 in disposable income and his consumption spending was $44,900. This year his disposable income increased by $15,000 and his consumption increased to $55,900.
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Test 2A Answer Key - 1 ANSWER KEY FOR TEST 2A APRIL, 2008...

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