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201Fin02Fall

# 201Fin02Fall - Econ 201 Prof Gordon Fall 2002 Northwestern...

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Econ 201 – Prof. Gordon Northwestern University Final Exam Fall 2002 Department of Economics December 10, 2002 Name_______________________________ Student # ___________________________ Please circle one : TA : Etienne Ron Section : Tu. Th. PART A: Multiple choice (1 pt. each, 45 pts. total) Choose the one alternative that best completes the statement or answers the question, and report your answer in the table below. Question Answer Question Answer Question Answer 1 _____ 16 _____ 31 _____ 2 _____ 17 _____ 32 _____ 3 _____ 18 _____ 33 _____ 4 _____ 19 _____ 34 _____ 5 _____ 20 _____ 35 _____ 6 _____ 21 _____ 36 _____ 7 _____ 22 _____ 37 _____ 8 _____ 23 _____ 38 _____ 9 _____ 24 _____ 39 _____ 10 ______ 25 ______ 40 ______ 11 _____ 26 _____ 41 _____ 12 _____ 27 _____ 42 _____ 13 _____ 28 _____ 43 _____ 14 _____ 29 _____ 44 _____ 15 ______ 30 ______ 45 ______

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Econ 201 – Prof. Gordon Northwestern University Final Exam Fall 2002 Department of Economics December 10, 2002 Multiple Choice Questions Instructions : ± The following is a closed material (though, open mind) exam. ± Calculators are allowed but pre-programmed formulas are strictly forbidden. ± Report all your answers in the grid. ± As a reminder, the exam is graded by humans, so write as NEATLY as possible. Good luck!
You have just been elected finance minister of Tonga (congratulations!). Assume that Tonga has no foreign trade and that all taxes and transfers are lump-sum . You receive the following information from your team of economists (all amounts are expressed in millions of pa’angas, Tonga’s currency): Real GDP Consumption Expenditure Investment Government Purchases 10 8 6 8 20 12 6 8 30 16 6 8 40 20 6 8 50 24 6 8 60 28 6 8 1. Based on the above table, what is equilibrium aggregate expenditure in Tonga? a) 14 millions of pa’angas b) 16 millions of pa’angas c) 30 millions of pa’angas d) 40 millions of pa’angas e) None of the above / cannot tell 2. Based on the above table, what are autonomous expenditures in Tonga? a) 6 millions of pa’angas b) 8 millions of pa’angas c) 14 millions of pa’angas d) 18 millions of pa’angas e) None of the above / cannot tell 3. What is the marginal propensity to save in Tonga? a) 0 b) 0.2 c) 0.4 d) 0.6 e) None of the above / cannot tell 4. What is the government purchase multiplier in Tonga? a) 0.4 b) 0.6 c) 1.67 d) 2.5 e) None of the above / cannot tell 5. In Gregland, government purchases are \$3 trillion, net exports are \$6 trillion, private saving is \$13 trillion and net taxes are \$4 trillion. What is the value of investment? a) \$6 trillion. b) \$8 trillion. c) \$18 trillion. d) \$20 trillion. e) Cannot tell / none of the above. 6. Why do Americans borrow on credit cards at high interest rates while adding money to their saving accounts at low interest rates? a)

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201Fin02Fall - Econ 201 Prof Gordon Fall 2002 Northwestern...

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