midterm2fall2007webversion

midterm2fall2007webversion - Section I: Binary Choice (16...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Section I: Binary Choice (16 questions @ 2.5 points each = 40 points) 1) Last year, the nation of Bruinville had $500 of private savings. Government spending was $400, and total tax revenue was $900. Households spent $2100 on consumption goods and businesses spent $1000 on investment. Transfer programs cost the government $200. Under the assumptions of the classical model, what was the value of capital inflows in Bruinville last year? a. -200 b. 200 Use the chart below for the following two questions. Country Population Employment Output(Real GDP) Germany 80 million 40 million $ 3 trillion England 60 million 30 million $ 2 trillion 2) Which country has higher labor productivity? a. Germany b. England 3) Which country has a higher standard of living? a. England b. Germany
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4) If private savings equals investment in an open economy, then which of the following must also be true? a. Capital inflows = G – (T – TR) b. Imports = Exports 5) We know the following information about a closed economy: total wages earned by the employed (including government workers and officials) in the country’s labor market this year equal $500 million; total profit earned by firms in the country this year equals $1,000 million; rent and interest (including usage of land as well as money) for this year equals $200 million; government spending this year is $100 million; and investment spending this year is $1,500 million. Based on the above information and the principles underlying the circular flow diagram, can we compute GDP for this country this year? a. No b. Yes
Background image of page 2
6) Suppose the Consumer Price Index (CPI) rose over one year from 120 to 150, while during the same period of time the nominal wage rose from $6 to $9. Then the real wage a. rose by 20% b. rose by 25% 7) Fluctuations from the long run potential real GDP level are most easily explained by the a. Classical Model b. Keynesian Model 8) Leakages are defined as a. income earned, but not spent, in domestic markets b. spending from sources other than households
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
workers. a. True b. False Use the information below to answer the following two questions using the Keynesian Model: C = consumption spending = 20 + 0.8 (Y – T) I = investment spending = 20 G = government spending = 8 T = net taxes = 0.75 Y 10) What is the value of disposable income for this closed economy? a.
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 13

midterm2fall2007webversion - Section I: Binary Choice (16...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online