Mid-term_2_examples_4-10 - SAMPLE EXAM QUESTIONS FOR...

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Page 1 SAMPLE EXAM QUESTIONS FOR ECON3310 MIDTERM II Content: Mankiw Chapters 6, 7, 8, 9, 10, 11, 13 PART I. Short questions: 4 out of 5 (40% of total marks) 1. Explain what type of wage rigidity is most likely to affect the unemployment rates of the following types of workers: a. workers with low marginal labor productivity; b. workers seeking jobs that are typically unionized, such as longshoremen and electricians; and c. workers engaged in creative work that is not easily monitored. 2. Suppose a government is able to permanently reduce its budget deficit. Use the Solow growth model of Chapter 8 to graphically illustrate the impact of a permanent government deficit reduction on the steady-state capital-labor ratio and the steady-state level of output per worker. Be sure to label the: a. axes; b. curves; c. initial steady-state levels; d. terminal steady-state levels; and e. the direction the curves shift. 3. Assume that an economy is described by the IS curve Y = 3,600 + 3 G – 2 T – 150 r and the LM curve Y = 2 M / P + 100 r [or r = 0.01 Y – 0.02( M / P )]. The investment function for this economy is 1,000 – 50 r . The consumption function is C = 200 + (2/3)( Y T ). Long-run equilibrium output for this economy is 4,000. The price level is 1.0 and
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Mid-term_2_examples_4-10 - SAMPLE EXAM QUESTIONS FOR...

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