# Macro_Final_Sample_2_Answers - PRINCIPLES OF MACROECONOMICS...

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PRINCIPLES OF MACROECONOMICS FINAL EXAM: SAMPLE #2 Duration - 3 hours Aids Allowed: Non-programmable calculators only THERE ARE 100 MARKS IN THIS EXAM. THERE ARE TWO PARTS Part I Ten macroeconomic questions of which you are expected to answer any eight (10 marks each for a total of 80) If you answer more than eight questions without clearly indicating the eight you wish marked, the eight lowest marks will count as your eight. Part II10 multiple choice questions worth 2 marks each for a total of 20. Wrong answers will not be deducted from right in grading Part II. All questions are to be answered in the spaces provided in this question paper booklet Do not remove any pages or add any pages. No additional paper will be supplied. The blank backs of pages may be used for rough work. Show your work where applicable. PRINT YOUR NAME AND STUDENT CLEARLY BELOW Student Name: ______________________________________________________ (Family Name) (Given Name) Student Number : ______________________________ PUT YOUR NAME AT THE TOP OF EACH PAGE. THERE ARE 13 PAGES TO THE EXAM Marks Awarded #1 #2 #3 #4 #5 #6 #7 #8 #9 #10 MC - 1/13 -

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Principles of Macroeconomics: Final Exam, Sample #2 Answers PART I : Answer only 8 of the 10 questions Place your answers (and work where necessary) in the space provided. 1. Prices Indices (10 marks) 1997 2000 Price/unit Quantity Price/unit Quantity Rice (kilo) \$1.50 60 \$2.50 40 Potatoes (kilo) \$2.00 30 \$1.20 50 The above table gives data for the price/unit and quantity of Rice and Potatoes consumed by the average student in 1997 and 2000. Assuming that 1997 is the base year, calculate the following values. a) nominal student consumption in 2000 (1 mark) 1 mark: correct setup (formula or numbers): 2.50*40 + 1.20*50= \$160 b) the consumer price index for 2000 (3 marks) 1 mark: correct numerator (2.5*60 + 1.2*30) = 186 1 mark: correct denominator = 1.5*60 + 2 * 30 = 150 1 mark: correct answer = 100*186/150 = 124 c) real consumption in 2000 relative to 1997 according to the consumer price index (1 marks) 1 mark: right answer (or consistent with a) and b)) = \$160/124 =\$129 d) the total inflation between 1997 and 2000 relative to 1997 (1 mark) 1 mark: (124 –100)/100 = 24 % (or consistent with b) e) real consumption in 2000 according to the GDP deflator measure using CPI (1 mark) 1 mark: = 160 from 1.5*40 + 2 * 50 [or could also divide Nom by deflator] f) the GDP deflator for 2000 given 1997 as the base year (3 marks) 1 mark: correct numerator = 2.5*40 + 1.2*50 1 mark: correct denominator = 1.5*40 + 2 * 50 1 mark: correct answer = 100*160/160 = 100 - 213 -
Principles of Macroeconomics: Final Exam, Sample #2 Answers 2. National Accounts (10 marks) The following data are from the National Accounts of Canada for 1980 (\$Billions) Corporate Profits (before Taxes) 65,000 Interest and Miscellaneous Investment Income 45,000 Gross Investment 120,000 Net Investment Income of Non-Residents 20,000 Government Spending 130,000 Wages and Salaries and Supplementary Labour Income 330,000 Government Transfer Payments 55,000 Depreciation (Capital Consumption Allowances) 70,000 Exports 160,000 Net Income of Unincorporated Businesses (Farm and non-Farm) 30,000 Imports 155,000 Consumption 350,000 Corporate Taxes 20,000 Personal Taxes 25,000 Indirect Taxes Less Subsidies 60,000 Retained Earnings (Undistributed Corporate Profits) 30,000 Rent (Rental Income) 5,000 Calculate (show your work)

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