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2006W - Solution to Test 1 (ECO209) - November 9, 2006

# 2006W - Solution to Test 1 (ECO209) - November 9, 2006 -...

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Page 1 of 10 Department of Economics Prof. Gustavo Indart University of Toronto November 9, 2006 ECO 209Y MACROECONOMIC THEORY Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER Circle your section of the course : L0101 L0201 L0401 L5101 MW – 10-11 MW – 1-2 MW – 2-3 W – 6-8 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 10 (ten) pages. 4. Aids allowed: a simple calculator. 5. Use pen instead of pencil . DO NOT WRITE IN THIS SPACE Part I /30 Part II /15 Part III 1. /10 2. /10 3. /10 4. /10 TOTAL /85 SOLUTION

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Page 2 of 10 PART I (30 marks) Instructions : Multiple choice questions are to be answered using a black pencil or a black or blue ball-point pen on the separate SCANTRON sheet being supplied. Be sure to fill in your name and student number on the SCANTRON sheet. Write your course section number (e.g., L0101, etc.) on the SCANTRON sheet (in the area where it says “DO NOT WRITE IN THIS SPACE”). Each question is worth 3 marks. No deductions will be made for incorrect answers. Write your answers also in the table below; but only answers recorded on the SCANTRON sheet will be graded. Questions whose answers are not entered on the SCANTRON sheet will get a zero mark. 1 2 3 4 5 6 7 8 9 10 B C D E B A A C E A 1. In 2005, Speedy Motors purchased \$5 million worth of steel and car parts in order to produce 1,000 cars. Speedy Motors sold in 2005 all these 1,000 cars to Global Car Dealer for \$15,000 each. Global Car Dealer sold 800 of these cars to the public in 2005, at a retail price of \$20,000 each. What was the contribution of Speedy Motors and Global Car Dealer to GDP in 2005? A) \$5 million. B) \$14 million. C) \$15 million. D) \$20 million. E) None of the above. 2. The income earned by a French student during her studies in Canada is included: 3. Canadian real per capita disposable income increased by about 16 percent between 1981 and 2005. Over this period, the share of per capita consumption expenditure in per capita disposable income increased from about 75 percent in 2001 to more than 95 percent in 2005. Which of the following statements may explain this increase in consumption expenditure as a share of disposable income?
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