mid154a - Econ 154b Yale University Spring 2005 Prof Tony...

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Econ 154b Yale University Spring 2005 Prof. Tony Smith MIDTERM EXAMINATION This is a closed-book and closed-notes exam. You have 75 minutes to to complete the exam. There are five (5) questions on the exam. Each question is worth 20 points, for a total of 100 points. To receive full credit, you must provide convincing explanations to support your answers. Strive to make your explanations clear and concise. Please write as neatly as possible. 1. (20 points) Your task in this problem is to construct national income and product accounts for a world economy that consists of two countries, the United States (U.S.) and Japan. In the U.S., there are two firms, USSteel and USAuto, both owned by U.S. citizens. In Japan, there is one firm, JapanAuto, owned by Japanese citizens. All of the employees of USSteel and USAuto are U.S. citizens and all of the employees of JapanAuto are Japanese citizens. In a given year, USSteel produces $6000 worth of steel and pays wages of $1500. It sells $2000 worth of steel to USAuto and $4000 worth of steel to JapanAuto. USAuto buys $2000 worth of steel from USSteel and pays wages of $4000. USAuto
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mid154a - Econ 154b Yale University Spring 2005 Prof Tony...

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