Macroecon test1 with answers

Macroecon test1 with answers - MIDTERM EXAM 1 MARCH 2009...

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MIDTERM EXAM 1: MARCH 2009 ECON 0110: MACROECONOMICS 12 PM CLASS DR. KENKEL THIS IS TEST 1 WITH ANSWERS 20 questions worth 12.5 points each. Total Points = 250 1. Use the following information for 2008: Person is single, living alone Personal exemption deduction is $3,500 per person Standard deduction is $5,450 Gross income = $84,950 TAX RATES TAXABLE INCOME 10% $ 0 - $ 8,000 15% $ 8,000 - $ 32,500 25% $ 32,500 - $ 78,800 28% $ 78,800 - $164,550 Calculate the person's tax amount. a. Less than 12,750 b. 12,750 to less than 14,200 c. 14,200 to less than 15,200 *d. 15,200 to less than 17,000 e. 17,000 or more ANSWER: TAXABLE INCOME IS 84,950 – 3,500 – 5,450 = 76,000 taxes = 8000 X .10 + (32,500 – 8,000) X .15 + (76,000 – 32,500) x .25 = 800 + 3,675 + 10,875 = 15,350 2. In the previous problem, the person's average tax rate on gross income is: a. less than 12% b. 12.0% to less than 15.3% *c. 15.3% to less than 19.6% d. 19.6% to less than 22.4% e. 22.4% or higher ANSWER: 15,350/84,950 = .1807, or 18.07% 3. You have a contract which states that you will be paid $37,000 two years from today and an additional $26,000 three years from today. Assume you could invest money at 6% annual interest elsewhere in the economy. What is the present value of the contract? a. Less than $50,000 b. $50,000 to less than $53,000 *c. $53,000 to less than $57,000 d. $57,000 to less than $61,000 e. $61,000 or more ANSWER: 37,000/(1.06)^2 + 26,000 /(1.06)^3 = 32,929.87 + 21,830.10 = 54,759.97 4. Suppose that, during 2006, real GDP was $7.44 trillion. During 2006, the value of the Consumer Price Index was 181.6 (using 1983 as the base year). During 2006, nominal GDP was a. Less than 4.0 trillion b. 4.0 trillion to less than 8.5 trillion c. 8.5 trillion to less than 11.5 trillion *d. 11.5 trillion to less than 14.0 trillion e. 14.0 trillion or more ANSWER: 7.44 x 1.816 = 13.51 trillion 1
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Use the following information to answer questions 5, 6, and 7. 5. The following points lie on the linear PPF for the USA: USA USA Computers Televisions 0 24,000 6,000 12,000 12,000 0 In the USA , the opportunity cost of a television is *a. From 0 to .53 computers b. from .54 to 1.64 computers c. from 1.65 to 4.63 computers d. between 1000 and 3000 computers e. more than 3000 computers ANSWER: OC(television) = 12,000/24,000 = 0.50 computers per television 6. The following points lie on the linear PPF for CHINA: CHINA CHINA Computers Televisions 0 3,000 2,000 1,500 4,000 0 In CHINA , the opportunity cost of a computer is a. Between 0 and 0.55 televisions *b. between .56 and 1.27 televisions
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This note was uploaded on 04/27/2009 for the course ECON 0110 taught by Professor Kenkel during the Spring '08 term at Pittsburgh.

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Macroecon test1 with answers - MIDTERM EXAM 1 MARCH 2009...

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