Practice_Problems

Practice_Problems - Economics 102 Practice Problems -...

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Economics 102 Practice Problems - Winter 2010 Professor Lee Ohanian Question 1: True, False, or Uncertain, and explain. No credit without an explanation. consumers substitute away from goods whose price rises. (1c) Economic models are useless because they leave out lots of details about the economy. (1d) Suppose GDP = $100, consumption = $70, investment = $20, and government spending equals $10. This implies that both imports and exports must be $0. Question 2 Consider the following simple model, where a variable with a ±bar²over the top of it means the variable is ³xed. Y = F ( K; L ) C = C ( Y T ) G = G = T I = I ( r ) Suppose that consumers suddenly wanted to increase their spending, and decrease their savings. Describe what will happen to output, consumption, government spending, taxes, investment, and the real interest rate. You may wish to use a graph(s) to help explain your answer. Question 3
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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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Practice_Problems - Economics 102 Practice Problems -...

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