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Exam 2 Review

# Exam 2 Review - Review 2 Q1 Suppose you borrow \$22,000 that...

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Review 2

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Q1) Suppose you borrow \$22,000 that has to be re-paid in a years time. If the nominal interest rate is 8% and the inflation rate is 2%, the nominal amount repaid is ________, while the real amount repaid is______________? A) \$23760, \$22440 B) \$22440, \$23760 C) \$20370, \$20755 D) \$20755, \$20370 E) \$23760, \$23320

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Year Nominal GDP Price Index 2005 \$200 80 2006 \$220 90 2007 \$240 95 2008 \$260 98 Q2) Using the table above. What is the value of Real GDP in 2006 using 2008 as the base year? A) \$82.92 B) \$239.56 C) \$202.04 D) \$76.15 E) Not enough information
Q3) Using the table above what is profit? A) \$1003 B) \$1421 C) \$2001 D) \$356 E) None of the above. GDP \$20,000 Capital consumption \$5245 Wages \$11223 Net factor income from abroad \$290 Rent \$256 Profit ???? Interest \$687 Indirect Business taxes \$878

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Q4) Using the table above, what is the yearly growth rate in nominal GDP in 2006? A) 74% B) 105% C) 125% Year Price of apples Quantity of apples Price of butter Quantity of butter Price of Guns Quantity of Guns 2005 \$2.00 20 \$1.20 5 \$10.00 2 2006 \$2.50 22 \$2.00 10 \$20.00 3 2007 \$3.00 24 \$2.80 20 \$30.00 4 2008 \$4.00 26 \$3.60 30 \$40.00 5
Q5) Using the table above what is the value of Real GDP in the year 2006 if 2007 is the base year? A) \$3,200 B) \$12,600 C) \$7,150 D) \$4,200 E) None of the above. Year Price of  Oil Quantity  of Oil Price of  Butter Quantity  of butter Price of  Guns Quantity  of guns 2005 \$4 100 \$1 50 \$2 200 2006 \$10 150 \$1 100 \$4 400 2007 \$25 300 \$2 150 \$8 600

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Q6). Suppose last year the exchange rate was \$1 : £2, but now this year the exchange rate was \$1 : £3.
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