Solution-simulated 1st prelim 09292009

Solution-simulated 1st prelim 09292009 - Solution simulated...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Solution – simulated 1 st prelim 09292009 <The actual exams are clearer and easier than the simulated exams, as what is supposed to be> (1) President Reagan’s tax – cutting program had two components – a) The predictive part: Reduced tax revenue leads to reduced government spending and activity b) The prescriptive part: Reduced government activity qualifies as a desirable political reform. Thus, economists may differ among themselves in their support or opposition of Reaganomics, on either the means or the ends, or both of Reagan’s program. (2)To be analytic means to be conceptually precise by introducing symbols for the magnitudes in the discussion. Let there be two types of goods: x(1, t) and x(2, t) produced or c(1, t) and c(2, t), consumed, in year t, with corresponding unit prices p(1, t) and p(2, t), respectively. For definiteness, denote computer as good 1, and all others as good 2. The comparison is between the two periods: t’ = 0 and t” = 15. It is given that i. There is a change of relative prices -: p(1, t”) < p(1, t’), p(2, t”) > p(2, t’). or, p(1, t »)/p(1, t’) < 1 < p(2, t )/p(2, t’), which implies the relative desirability of computer to other goods has declined.
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern