mid 1 - YORK UNIVERSITY Department of Economics ECON1010N...

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YORK UNIVERSITY Department of Economics ECON1010N: Principles of Macroeconomics Midterm #1: February 4, 2011 Duration - 1 hour Aids Allowed Non-programmable calculators only Time Allowed : 60 Minutes This total marks in this test are 50. The test is divided into two parts: Part I - problem format - is worth 40 marks (40 of the total mark of 50) Part II – Explanations (5 marks) and Multiple choice (5 marks)= (10 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 5 pages to the exam. - 1/5 -
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ECON1010M: Midterm Test #1: February 4, 2011 Name: _______________________ Part I: Place your answers (and work where necessary) in the space provided. Clearly label all axes, curves, and points. 1. Prices Indices (14 marks) January, 2005 January, 2010 Price/unit Quantity Price/unit Quantity Chicken (kg) $10.00 14 $8.00 20 Beef (kg) $15.00 8 $20.00 5 The above table gives data for the price/unit and quantity of Chicken and Lentils consumed by the average family in January of 2005 and of 2010. Assuming that 2005 is the base year, calculate the following values to the nearest decimal. a) Nominal student consumption in January, 2005. (1 mark) 1 mark: correct set-up and answer: $10*14 + $15*8 = $260 b) the Consumer Price Index (CPI) for January, 2010, to the nearest decimal. (3 marks) 1 mark: denominator: $10*14 + $15*8 = $260 1 mark: numerator: $8*14 + 20*8 = $272 1 mark: correct answer = 100*$272/$260 = 104.6 (accept 105) c) Real Consumption in January, 2010 relative to January, 2005 according to the CPI. (2 marks) 1 mark: set up: Nominal/CPI = 100*($8*20 + $20*5)/104.6 (or consistent with b) 1 mark: correct answer = $248.5 (accept $249) d) Total Inflation between 2005 and 2010 relative to 2005 using the CPI (1 mark) 1 mark: 4.6% (or 5%) (or consistent with answer in b) e) the GDP deflator for January, 2010, given January, 2005 as the base year (3 marks) 1 mark: correct numerator = $8*20 + $20*5 = $260 1 mark: correct denominator = $10*20 + 15*5 = $275 1 mark: correct answer = 100 * $260/$275 = 94.5 (accept 95) f) Real Consumption in January, 2010 according to the GDP deflator measure (2 marks) 1 mark: some work such as 100*$260/94.5 or $10*20 + 15*5 = $275 1 mark: correct answer = $275 g) Real student Income in January, 2010 using the CPI if nominal student income was $2,500 in January, 2010. (2 marks) 1 mark setup with 2,500/their CPI 1 mark: $2,389.7 from 2,500/104.6 (accept $2,390) (must have correct answer)
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