mid102-2004-answers

mid102-2004-answers - Economics 102 Midterm Exam - Spring...

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Economics 102 Midterm Exam - Spring 2004 Professor Lee Ohanian Answer all Questions Clear answers will get more points than long, rambling answers. Full credit for a question requires complete derivations and/or expla- nation of your answer. Question 1 - 18 points Consider an economy in which consumption was 60, investment was 20, government spending was 20, exports were 10 and imports were 10. Suppose that depreciation was 10, and that indirect business taxes were 10. Foreigners earned income = 10 in the US, and US residents earned income = 20 from abroad. Given this information, calculate nominal GDP, nominal GNP, nominal NNP, and nominal national income. (12 points) Suppose that nominal GDP was equal to 200 in 2000, and equal to 300 in 2003. The price of output in 2000, which is the base year, is 1, and the price of output in 2003 is 2. Calculate real GDP in 2000 and 2003, and calculate the (6 points) Question 2 - 18 points Karl Marx, the creator of the communist movement, predicted that capi- talism would come to an end because he believed that the rental payment to capital would ultimately fall to 0. For the production function AK L 1 ; under what circumstances would Marx be right? What would happen to the share of income paid to capital if Marx was right? What would happen to this income share if Marx was wrong? Explain the similarity or the di/erence in the answers to these last 2 questions.
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This note was uploaded on 03/06/2010 for the course ECON 102 taught by Professor Serra during the Spring '08 term at UCLA.

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mid102-2004-answers - Economics 102 Midterm Exam - Spring...

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