2003S - Test 1 (ECO202) - June 19, 2003

# 2003S - Test 1 (ECO202) - June 19, 2003 - Department of...

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Department of Economics Prof. Gustavo Indart University of Toronto June 19, 2003 ECO 202Y – L0101 MACROECONOMIC THEORY Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS : 1. The total time for this test is 1 hour and 50 minutes. 2. This exam consists of three parts. 3. This question booklet has 12 (twelve) pages. 4. Aids allowed: a simple calculator. 5. Use pen instead of pencil . DO NOT WRITE IN THIS SPACE P a r t I /50 Part II /20 Part III 1. /10 2. /10 3. /10

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PART I (50 marks) Instructions : Circle the most appropriate answer . Each question is worth 2.5 (two and one-half) marks. No deductions will be made for incorrect answers. 1. Suppose that savings are \$986.9 billion, investment is \$796.5 billion, and the current account balance is -\$55.1 billion. What is the government budget surplus? a) -\$245.5 billion b) -\$135.3 billion c) \$135.3 billion d) \$245.5 billion 2. Jim’s Nursery produces and sells \$1,300 worth of flowers. Jim uses \$200 in seeds and fertilizer, pays his workers \$700 in wages, pays \$100 in taxes, and pays \$200 in interest on a loan. Jim’s contribution to GDP is a) \$900 b) \$1,000 c) \$1,100 d) \$1,800 3. Assume a Canadian dealer bought 100 TVs from Korea for \$250 each in 1996. He subsequently sold 80 of them in 1996 for \$450 each, and the rest in 1997 for \$400 each. By how much was the Canadian GDP affected in 1996? a) \$45,000 b) \$36,000 c) \$19,000 d) \$16,000 4. Suppose that an economy produces only food and clothing, and that price and quantity data are given in the table below. Using Year 2 as the base year, what is the percent change in real output from Year 1 to Year 2? Round off to the nearest percentage point. Year 1 Year 2 Good Quantity Price Quantity Price Food 4000 \$4 4500 \$6 Clothing 5000 \$3 5200 \$2 a. 8% b. 10% c. 12% d. 15% 5. Nominal GDP in 1970 was \$1,015.5 billion, and in 1980 it was \$2,732.0 billion. The GDP deflator is 42.0 for 1970 and 85.7 for 1980, where 1982 is the base year. Calculate the percent change in real GDP in the decade from 1970 to 1980. Round off to the nearest percentage point. a) 32% b) 104% c) 132% d) 169% 6. The aggregate expenditure (AE) curve will be steeper a) the larger is the interest sensitivity of investment demand b) the smaller is the interest sensitivity of money demand c) the larger is the tax rate d) the smaller is the marginal propensity to import Page 2 of 11
7. The IS curve will be steeper a) the smaller is he interest sensitivity of investment demand b) the larger is the tax rate c) the smaller is the marginal propensity to consume d) all of the above 8. A reduction in the demand for real balances at each level of the market rate of interest shifts a) the IS curve up to the right b) the IS curve down to the left c) the LM curve up to the left d) the LM curve down to the right 9. The real demand for money curve is steeper hen a) the larger is the interest sensitivity of investment demand b) the smaller is the interest sensitivity of money demand

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## This note was uploaded on 04/10/2010 for the course ECO ECO202 taught by Professor Masoudanjamshoa during the Spring '10 term at University of Toronto- Toronto.

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2003S - Test 1 (ECO202) - June 19, 2003 - Department of...

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