ECON105 - Eldar Sehic SFU 2009-3 ECON105 first exam (page 1...

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Unformatted text preview: Eldar Sehic SFU 2009-3 ECON105 first exam (page 1 of 5) 10 QUESTIONS, 3 MARKS EACH (1) Consider the TIMEI’OUTPUT graph. (a) Draw the graph and clearly label a recession. Ou‘fl’u‘r MN’5'5‘“ 'T ‘ 2 X “r ‘ _}’/ o'/ ' "f'rmé (b) What variables can change the potential output of the economy? FAL‘TCJIQ Sufi-"LT ("W—'55,) find) Tfitr‘rNocogj (PF-8 DAL-’N'IT‘f) (2) Imagine an economy where the peach farmer picks and sells $600 of peaches to the yogurt factory and $300 of peaches to another country. The milk factory sells $800 of milk to the yogurt factory and $500 of milk to consumers. The yogurt factory uses the peaches and milk to make yogurt, and sells $2400 of yogurt to consumers and $200 of yogurt to the government. (a) Measure the economy’s GDP by value-added. \ffi (RR) '2 Set: + 3m: C - t‘cc V'A(M.F.)= Eugiyfioec 7553:. s04} (Y.F.) ‘: Lam: + 1.3: w 6c: H 25;, -.: :2,” (films! -_- Tomi. vn = ‘(av + .3"; + [1-1, = 3th”. (b) Measure the economy‘s GDP by expenditure. 43;:C+X+L‘+x_—%' :(C)+(c1)+(x) “i ('30:: + 1‘190)+(2.sp) + (300) : B‘foo Eldar Sehi'c SFU 2009-3 ECON105 first exam (page 2 of 5) (3} Using a completely labelled NSJNAF graph show what happens immediately when consumer optimism n‘ses. wNJ'LI(M£fL ofl‘FiNis‘z‘i '7- Frtom Co (I) n; (:(2)) (4) Consider a small economy that produces only goods X and Y. The price of good X was $1 in 2005, $3 in 2006, and $2 in 2007. The price of good Y was $4 in 2005, $6 in 2006, and $4 in 2007. The quantity of good X was 10 in 2005, 5 in 2006, and 5 in 2007. The quantity of good Y was 5 in 2005, 5 in 2006, and 10 in 2007. Let 2007 be the base year. Calculate the inflation rate from 2005 to 2006. .._. p 7-r _ 3" .) Cr ‘7, ll” 4(lm335: cf ‘19 ‘7 P i _ 7 g - as ' ‘——— "‘ filmy—{So “n; 5(- Nmmm 4D? (v; ‘. -- “PM fKory £5775 ._ ’3‘..M ‘22-»;- ‘i'b 2:161 '7 v.5 =1‘r04 “ii-cf”: 3v 1? " .- Hr) LJIaq,-'5"‘§+(Jitsr‘i'S' 7/{Off'zc‘,/— “It. Vas- Pg; 143m :79 up»: 1.79.7 PIT-(CC! _' _ ’5-5-35— H?) fps—t'ZXto+~1x5—:Lro 1? r) YGC'TILY'F 1‘5’ : 35 1'.” (00 y_ Eldar Sehic SFU 2009-3 ECON105 first exam (page 3 of 5) (5) Using a completely labelled LEAKAGESIINJECTIONS graph, show the immediate effect on the economy if the relative international price rises. ,.'j:-- ’/-a—-.t gt: — W mm mm mm 1/ &%’_I {Uri-1‘) W MI ,1, ML I 964 ACTI» i S i f e” -- —— —-———_._—--5£xx,~¢ : {'bKt'tJ'f'J-Hr , tea-151671765; _ ____ $11.71;: /'~6(/-é).t-Hl fh’cetf‘lor-(Jz L Fo"“lo+ V‘" 4—. w {n+qe+{c' INJécTivHSf _ ,7 (6) Imagine an economy with no government, such that autonomous consumption is $65, autonomous investment is $10, and autonomous exports are 525. Also, the marginal propensity to consume is 95%, and the marginal pmpensity to import is 5%. (a) Find the equilibrium income. C t r 4- X "H H fi£1C+iiL{+X-M A #— :cg+i'94‘q;+{s+{U'43‘M3‘7' -' “‘7 =Co+fa+xu+[b-m:7 {30‘0‘571'7' (hi -: 65+ m+zy1 [c.9r-c.cr]-{ r" \f : (CCU. (b) If autonomous exports decrease by 510, what will be the new equilibrium income? 60¢ 8‘! ’0 (5”er "‘ "°) --—‘-) HSirvfi Men: mi: M I ‘FG4—c-‘I 7r 7?) 9° "’"C’YT‘? '3) YHi-u : we, .7 uswq swam/E Hmw’ue-t (1c): a, :4- :m s *“r ....- , ‘?-'_ l" "’ “’ A2»; A9 :(’c)("’c) = -ro‘o 'Ym 7 ’000'lfio _ five: (c) What marginal propensity to spend will give this new equilibrium income, from part (bi, if autonomous exports remain at $25? Ava—:7 1920+ 2—1 '—' T ’00 + 1' (qcc‘) 1‘ 930 1) gm” ‘2 “2 trot. : 8:49 _2 : 8cm ‘icm ' 7 Eldar Sehi'c SFU 2009-3 ECON105 first exam (page 4 of 5) (7) Assume the economy is currently in a recessionary gap. (a) Show using an ADXASILRAS graph what will happen if the government's long-run solution is used? {7 M45 (b) What is an advantage of using the government's long»run solution in a recessionary gap? Mr:va PCSSI'GLC: ANS-wees .' F451”: '5 ti 71’4"“ MG“: Yd FWC‘W-‘WMMJ', H: QB”. H“.M478€ (Lava-E Pubcr( Jealuncfl .._A, (c) What is a disadvantage of using the government's long-run solution in a recessionary gap? Mair“? PHSHTLJE xii-rifled .' FT. Hurt-r) Trees-‘5 kw“? J’7V’N‘55; #1443 Pravda-6 fif’t’Nt-H‘v‘fir (8) Imagine an economy at its potential with an equilibrium output of $400. Then there is an increase in investment of $50. The immediate effect is that equilibrium output becomes $550. The short-run effect is that equilibrium output becomes $500. (a) Calculate the simple multiplier. A_ thin-1t an 1-43 L; 5—5.5 L_ Lt u _ ‘ StMpLQ chrru'uii‘,a_ -:_ ‘1{ J) : " : rim : Afl-ép (EMA, Indra-q: 1,7) goo SL (b) Calculate the multiplier. A; (-JH—C‘T'ILH”) ,u “0 " “(50 [0'19 Mmtfrpciera : ._________—— _ ‘___ : ____ _. L Alkéo(tf"lr"ld-9-fl_f7) 5b 513 (c) What long—run solution will return the economy to the old price level? bficitche Sf’éM'pzm 9 Eldar Sehic SFU 2009-3 ECON105 first exam (page 5 of 5) (9) Assume the economy is initially at its potential. Then the government increases the marginal propensity to tax. (a) Using a completely labelled AD/ASKLRAS graph, show what happens immediately and in short—run? M45 A f (b) What happens to exports in short-run? mealtime (K0?) mum: Fug. (10) Imagine the economy's GDP is 560. Its factor supply is 20, and its productivity is 54. If productivity becomes $5, while other variables remain the same, what will be the new GDP? Explain using the GDP breakdown. 42>? = es : (Ml-EM) R p l ) r: '11ch Lg‘rrcnzri'rwzv Mrfi ) —— mew-:3 (Lc)(O-?-5") (‘5) t is ...
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This note was uploaded on 12/07/2010 for the course ECON ECON 105 taught by Professor S during the Spring '10 term at Simon Fraser.

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ECON105 - Eldar Sehic SFU 2009-3 ECON105 first exam (page 1...

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