mid2ansm11

mid2ansm11 - Second challenge: Solutions Eco 212: Summer...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Second challenge: Solutions Eco 212: Summer 2010 Question 1 (8 points). a. If gold is identical, then we would expect e = 1 and thus: e = 1 = PE P f = $ P Ounce 5 yen $ 3000 Yen Ounce (1) $ P Ounce = P f Yen Ounce E Yen $ = 3000 5 (2) P = $600 (3) b. An ounce of gold costs $1000 in the US and $600 in Japan, so gold is more expensive in the US. The dollar buys too much Yen, and thus too much gold in Japan. The dollar is thus overvalued. Alternatively, from the equation (2), E must fall to get P down to $600. Question 2 (12 points) . a. The average rate of technical change in the recession was:- 5% =- 1 3 1 . 5% + g T g T =- 4 . 5% (4) b. The contribution of technology was for 2009 was: contribution =- 4 . 5%- 5% = 0 . 9 = 90% (5) c. The fall in GDP during the recession was primarily due to technical change. As with most recessions, it is difficult for capital per worker to fall that much from quarter to quarter. Of course, the answer is still incomplete. What caused the fall in productivity?...
View Full Document

Page1 / 4

mid2ansm11 - Second challenge: Solutions Eco 212: Summer...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online