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Unformatted text preview: Econ 3140-2 Simulated First Prelim 09272009 (1) President Ronald Reagan launched a program of tax-cutting to reduce Federal government spending, so that the State would have to play a limited role in the society. This won support from some economists but also led to objections from other economists. Explain that this is an example that differences of opinion among economists can be of two different types. (2) Economy A has now become one of the major computer producers in the world, devoting a significant portion of the labor force in such production activity, and computers are present in most offices and shops, as well as many homes, today. In contrast, 15 years ago, relatively few computers are either produced or used there. Over this period, the unit price of computer has fallen significantly, while the prices of all other goods have risen instead. Explain analytically that: (a) The Laspeyres quantity index tends to over-estimate the GDP growth over these fifteen years (b) The cost of living index for this period will also show an upward bias for what it takes to maintain the...
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- Spring '08
- WELLMAN, J
- Robinson Crusoe, Robinson Crusoe