final-f2009

# final-f2009 - Final Exam Fall 2009 Question 1(48 points...

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Final Exam, Fall 2009 Question 1 (48 points total; 30 minutes total) A series of unrelated short-answer questions. a. (8 points) Personal saving in the U.S. is the difference between disposable income and consumption. Does foreign saving S F equal the difference between disposable income and consumption in foreign countries? Explain. b. (8 points) When g=0, what is the equilibrium growth rate of real output? Why? (you can answer this one mathematically if you like.) c. (8 points) What is a yield curve? Draw a typical yield curve. d. (8 points) When graphed, does the Phillips Curve slope up or down? Why? (Use economics, not math, for your explanation.) e. (8 points) Holidays approach and December is the month for shopping! If consumers pay for half of the gifts they buy with cash and half with credit cards that they don’t pay off until 2010, how much of their December gift shopping will be recorded in 2009’s GDP? Why? f. (8 points) Why is there no spending multiplier in the long-run flow-of-funds model? Question 2 (16 points total; 10minutes total) List two different events or actions or changes that can increase efficiency (E). For each, (i) explain why you think it would increase efficiency, and (ii) would this be recorded as a change in consumption, investment, government spending, or none of the above? Question 3 (18 points total; 11 minutes total) Suppose an economy can be described as follows: Saving rate = 20 percent Depreciation rate = 6 percent Labor Force Growth rate = 4 percent Efficiency = \$25,000 and is constant " = 0.5 Capital Stock = \$10 trillion Real GDP = \$10 trillion a. (8 points) What is the balanced-growth equilibrium value of output per worker? Show all your work or no points. b. (6 points) Is the economy in balanced-growth equilibrium? How do you know? If the economy is not in BGE, will the capital-labor ratio be higher or lower next period than it is in the current period?

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final-f2009 - Final Exam Fall 2009 Question 1(48 points...

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