FinalAnswers 2009 - Department of Economics University of...

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Page 1 of 13 Department of Economics Professor Kenneth Train University of California, Berkeley Fall 2009 ECONOMICS 1 FINAL EXAMINATION December 14, 2009 INSTRUCTIONS ANSWER KEY – DO NOT DISTRIBUTE 1. Please fill in the information below: Student’s Name: _____________________________________ SID #: ____________________________________________ GSI’s Name: ________________________________________ Section Number (Day/Time):___________________________ 2. This exam starts at 5:00pm and ends at 8:00pm. 3. If you finish before 7:45pm, turn in your exam to your GSI and leave quietly. 4. If you finish after 7:45pm, please remain in your seat until the end of the exam so that you do not disturb others. 5. When time is called, please stop writing and turn in your exam. 6. There is a total of 200 points, 10 questions, and 14 pages (including this cover sheet) points for each question are in parenthesis. 7. NO BLUE BOOKS NEEDED . Please answer the questions in the space provided. If you need extra room to answer the questions, use the backs of the pages. 8. Calculators are not permitted. 9. Good Luck and Happy Holidays! DO NOT TURN THE PAGE UNTIL YOU ARE TOLD TO BEGIN THE EXAM
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Page 2 of 13 Question 1: TRUE, FALSE, UNCERTAIN. (32 points) For each question decide whether the statement is false, true or uncertain. Your grade is determined by your explanation; an answer without an explanation receives no credit. Use graphs when needed to complement your answer. a) (4 points) If the government wants to minimize the effect on consumers when imposing an excise tax on a good, the government should charge producers for the tax rather than charging consumers. False: It does not matter who the government charges the tax to, both producers and consumers will share the tax, the amounts of the share will be determined accordingly to the elasticity of supply and demand in the market. b) (4 points) Absolute advantage in the production of a good exists when a country can produce more units of the good than another country can, independent of the resources used. False: Absolute advantage exists when one country can produce more units of a good with a specified amount of inputs than another country can produce with the same inputs.
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Page 3 of 13 c) (4 points) Consider the exchange rate Thailand Bath /US dollar. When the Thai bath depreciates, both US imports and Thai exports are going to increase. TRUE: Appreciation of dollar will increase US imports/ Depreciation of the Thai Bath will increase Thai exports. d) (4 points) Fiscal and monetary policy are more effective in a closed economy (i.e., an economy that does not trade) than an open economy. FALSE: Trade reduces the effect of fiscal policy. Trade increases the effect of monetary policy but makes it less predictable. e) (4 points)
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This note was uploaded on 10/09/2011 for the course ECON 1 taught by Professor Martholney during the Fall '08 term at University of California, Berkeley.

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FinalAnswers 2009 - Department of Economics University of...

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