# m2 - YORK UNIVERSITY Department of Economics ECON1010N...

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YORK UNIVERSITY Department of Economics ECON1010N: Principles of Macroeconomics Midterm #2: March 4, 2011 Duration - 1 hour Aids Allowed Non-programmable calculators only Time Allowed : 60 Minutes The total marks for this test are 50. The test is divided into two parts: Part I - Problem format - is worth 36 marks (36 of the total mark of 50) Part II – Explanations (9 marks) and Multiple choice (5 marks) (12 of the total mark of 50) Show your work where applicable . Please use pen instead of pencil . Print your name and student number clearly on the front of the exam and on any loose pages. Name: . (Family Name) (Given Name) Student # : . There are 6 pages to the exam. - 1/6 -

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ECON1010N: Midterm Test #2: March 4, 2011 Name: _______________________ Part I: Place your answers (and work where necessary) in the space provided. Clearly label all axes, curves, and points. 1. MacroModel (12 Marks) An economy has the following set of macroeconomic equations. Consumption: C = 245 + 0.75Yd Net Taxes T = 0.4Y Investment: I = 60 + 0.25Y Exports X = 480 Government Spending: G = 940 Imports IM = 37 + 0.1Y a) What is the Consumption equation as a function of Y (not Yd)? (1 mark) 1 mark: C = 245 + 0.45Y from something like 245 + 0.75(Y – 0.4Y) b) What is the Aggregate Expenditure equation? (2 marks) 1 mark: correct Autonomous part = 1,688 from AE as sum of above C + I + G + X - IM 1 mark: correct Marginal part = 0.6 from AE = 1,688 + 0.6Y c) Calculate the value of Autonomous Spending Multiplier. (1 mark) 1 mark: = 2.5 from something like 1/(1 – 0.6) d) Calculate the value of Equilibrium Income. (1 mark) 1 mark: Y = 4,220 from AE = Y or 1,688/(1 – 0.6) e) Calculate Consumption at equilibrium. (1 mark) 1 mark: C =2,144 from 245 + 0.45*4,220 (or 0.75 of calculated Yd) f) Calculate Personal Savings at equilibrium. (1 mark) 1 mark: = 388 from 0.6*4220 – 2,144 (from Yd – C) g) Calculate Net Exports at Equilibrium. (1 mark) 1 mark: X – IM = 21 from 480 – (37 + 0.1*4,220), must be positive h) What is the Change in Inventories at Y = 4,000?. (2 marks) 1 mark: correct AE =4,088 from perhaps 1,688 + 0.6*4000 (or some way to get correct answer) 1 mark: Change in Inventories = 4000 – 4,088 = -88 (must be negative or fall in inventories) i) What is the change in equilibrium Y due to an increase in Imports of 20? (1 mark) 1 mark: = - 50 from –20*2.5 or –20/(1 – 0.6) j) What is the government budget surplus/deficit? (1 mark) 1 mark: = 748 from 0.4*4,220 – 940 (must not be negative) - 2/6 -
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## This note was uploaded on 09/30/2011 for the course ECON 1010 taught by Professor Noordeh during the Spring '08 term at York University.

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m2 - YORK UNIVERSITY Department of Economics ECON1010N...

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