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YOUR NAME__________________________________1Columbia University Intermediate Macroeconomics EconUN3213,Final Exam Fall 2017 (A.D.), Professor XavierNOTE:YOU ARE NOT ALLOWED TO USE CALCULATORS!!!!Question 1.Short Speechesa.When Robinson Crusoe experiences a decrease in productivity (for everyhour of work, he collects fewer coconuts than he used to), will he react byworking harder or less hard (if he decides to react at all)? Will his overalllevel of consumption go up or down (or will remain unchanged)? You canuse graphs, but we need an INTUITIVE EXPLAINATION (Explanationdetermines grade).b.Based on your answer in (a), how will the typical worker react to theintroduction of an INCOME tax? (Discuss the various effects the workerwill face).c.Discuss the relation between the “concavity of the utility function” andconsumption smoothing.d.How does the introduction of a LUMP SUM tax affect the investmentdemand function? Explain intuitively.
Question 2. More Short Speeches.a.Oxfam says that income inequalities are increasing in countrieslike the United States, China, France or the UK. But we saw inclass that global income inequalities were falling. Who is correct?Explain!b.“Economies subject to the law of diminishing returns to physicalcapital cannot possibly grow in the long run by simplyaccumulating physical capital. They cannot even do it byincreasing the savings rate year after year”. Is Xavier speakingthe truth? Use models, equations and graphs if you want, but alsouse words to explain the two parts of the answer.c.Which one of the following three economies experiences largerproductivity growth (∆ A/A¿:(c1): Wage Bill=50, GDP=100, growth of GDP=10%, growth ofcapital=10% and growth of labor=10%(c2): Wage Bill=50, GDP=100, growth of GDP=10%, growth ofcapital=10% andgrowth of labor=5%(c3):Wage Bill=70,GDP=100, growth of GDP=10%,growth ofcapital=5%and growth of labor=5%

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Term
Fall
Professor
XAVIER

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