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Unformatted text preview: ECON 304.013 Exam 1 Part 1 Form B BRIEF ANSWER KEY- SHORT ANSWER Carefully answer the questions below. Put your answers in this test packet. This section is worth 30 points. BE SURE TO SHOW ANY CALCULATIONS IN DETAIL IN ORDER TO GET FULL CREDIT!!!! 1. ( 5 points ) Compare and contrast the classical and Keynesian schools of thought for the following economic issues. (a) The flexibility of wages and prices, and the speed of adjustment to new equilibria. Classical: fast adjustment of wages & prices to new equilibria Keynesian: sticky wages & prices prevent quick adjustment to new equilibria (b) The importance of macroeconomic policies. Classical do nothing; economy works best when left alone Keynesian government intervention can prevent recession. 2. ( 5 points ) In one year in the country of Countem, workers earned $4150, proprietor's income was $392, rental income was $20, corporate profits were $683, net interest was $228, taxes on production and imports were $329, business current transfer payments were $12, the current surplus of government...
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This note was uploaded on 09/15/2009 for the course ECON 304 taught by Professor Stone,mistyriano,alejandro during the Fall '07 term at Pennsylvania State University, University Park.
- Fall '07