test3_solns

# test3_solns - Department of Economics University of Toronto...

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Page 1 of 6 Department of Economics Prof. Gustavo Indart University of Toronto March 26, 2004 SOLUTIONS ECO 100Y – L0301 INTRODUCTION TO ECONOMICS Midterm Test 3 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS : 1. The total time for this test is 50 minutes. 2. This exam consists of two parts. 3. This question booklet has 6 (six) pages. 4. Aids allowed: a simple calculator. 5. Use pen instead of pencil . DO NOT WRITE IN THIS SPACE P a r t I /15 Part II 1. /15

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PART I (15 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. Any point above the aggregate demand curve (AD) shows combination of the price level (P) and the level of GDP or income (Y) in which a) AE (aggregate expenditure) is less than Y b) AE is greater than Y c) inventories are decreasing d) desired investment exceeds savings e) consumption is above its equilibrium level 2. An increase in the wage rate will cause a) the aggregate demand (AD) curve to shift down to the left b) the AD curve to shift up to the right c) the aggregate supply (AS) curve to shift down to the right d) the AS curve to shift up to the left e) a movement up the AS curve 3. An increase in income tax rates a) makes the aggregate expenditure function steeper and therefore lowers the value of the [expenditure] multiplier b) makes the aggregate expenditure function steeper and therefore raises the value of the multiplier c) makes the aggregate expenditure function flatter and therefore raises the value of the multiplier d) makes the aggregate expenditure function flatter and therefore lowers the value of the multiplier e) lowers aggregate expenditure, and has no impact on the multiplier 4. Which one of the following events would not be included in the total of final goods and services in an economy? a) a developer builds a new apartment building
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## This note was uploaded on 06/09/2010 for the course ECO ECO100 taught by Professor Inheart during the Spring '09 term at University of Toronto.

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test3_solns - Department of Economics University of Toronto...

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