Econ 52
Winter 2013 (Klenow)
Problem Set 2 Solutions
1) For each of the following, show whether the statement is true under CobbDouglas production:
a) Capital and labor are substitutes (
False.
2Y
0 ).
N K
2Y
(1 ) AK 1 N 0. They are complements, not s
Econ 52
Winter 2013 (Klenow)
Problem Set 1
Your Name: _
Your T.A.: _
Return to your T.A. in Section on FRIDAY JANUARY 18.
Each question is worth 10 points; 80 points total. Write answers in the space provided
(print one-sided so you can use up to two page
Econ 52
Winter 2013 (Klenow)
Midterm 1 Solutions
Today we have very low nominal interest rates and positive inflation. Lets consider
data from just a few years ago.
(1) In March 2008 one could obtain a 1-year U.S. government bond for $100 that
would pay o
Econ 52
Winter 2013 (Klenow)
Problem Set 2
Your Name: _
Your T.A.: _
Return to your T.A. in Section on JANUARY 25.
Each question is worth 10 points; 80 points total. Write answers in the space provided
(print one-sided so you can use up to two pages per q
Econ 52
Winter 2013 (Klenow)
Problem Set 3 Solutions
1) Explain how each of the following would affect current consumption relative to
GDP (C/Y) if consumers are forward-looking: (a) the retirement of baby-boomers;
(b) a decrease in the rate of expected f
Econ 52
Winter 2013 (Klenow)
Problem Set 1 Solutions
1) [Econ 1B Refresher] Consider the following estimates for an iPhone exported by
China to the U.S. in 2010: The U.S. exported $12 of electronics parts to China, and
a combination of other countries (th
Econ 52
Winter 2011 (Klenow)
Midterm #1
Please turn in the 2 Parts (A and B) in separate boxes.
On each Part, please write your name and TAs name.
Write on the exam. Use bluebooks only for scratch paper.
There are 8 questions total, and each question is w
Econ 52
Winter 2011 (Klenow)
Midterm 2, Part A
Your Name: _
Your TA: _
2013 NOTE: We will cover the material in question 1 after the 2nd Midterm.
1) Republicans propose cutting the level of government consumption permanently,
thereby preventing the need f
Econ 52
Winter 2013 (Klenow)
Final Exam Solutions
1) The new Japanese Prime Minister, Shinzo Abe, wants the Bank of Japan to
increase its inflation target from 1% to as high as 3%.
(a) Can the Bank of Japan achieve this once prices fully adjust with open
Econ 52
Winter 2013 (Klenow)
Final Exam Equation Sheets
1
1
Y
A
N
Cobb-Douglas: Y A K N 1
Y C I G NX
1 i
1 r
r i
1
X 1
K
Y
1
t
1
PVLR 0
Yt Tt Trt
1 r
t 0
w(1 N )
U C U N
p(1 C )
MPN
w
p
Euler equation: u '( ct ) (1 rt )u '( ct 1 ) g c ( r )
. wit
Econ 52
Winter 2013 (Klenow)
Midterm 1 Equation Sheet
Real GDP Y C + I + G + NX
enom
Nominal GDP P Y
f .c.
$
e PPP
pit 1 qit
Chain Weight Real GDP Growth i
pq
it 1 it 1
i
1 r
Cobb-Douglas: Y A K N
1
Pf .c.
P$
e real
pit qit
i
pq
it it 1
i
0.5
Econ 52
Winter 2013 (Klenow)
Extra Practice Questions for Midterm 1 (on material since PS 1 and 2)
1) Suppose new environmental regulations lower the level of TFP permanently in the
U.S.
(a) What is the impact on the labor demand curve, if any?
(b) What i
Econ 52
Midterm 2 Equation Sheet
Winter 2013 (Klenow)
Y C I G NX
w(1 N )
U C U N
p(1 C )
Cobb-Douglas: Y A K N
C
Y
1
Y
K 1
1
A
N
Y
t
1
PVLR 0
Yt Tt Trt
t 0 1 r
r
P
MPK uc
K
1 K
P
K
I /Y
Y gY
under Cobb-Douglas, steady states are
K t 1 (1 ) K t I
Econ 52
Winter 2011 (Klenow)
Final Exam
Please turn in Parts A and B in separate boxes.
On each Part, please write your name.
There are 12 questions total, and each question is worth 20 points.
This is a closed-book exam. You may not use notes, text, or c
Econ 52
Spring 2010 (Klenow)
Midterm 2, Part A
Your Name: _
Your TA: _
1) Consider a 1% permanent increase in the price of investment relative to output. What
is the percentage impact, in the long run, on (a) the user cost of capital; (b) the capitaloutpu
Econ 52
Spring 2010 (Klenow)
Midterm #1
Please turn in the 2 Parts (A and B) in separate boxes.
On each Part, please write your name and TAs name.
Write on the exam. Use bluebooks only for scratch paper.
There are 8 questions total, and each question is w
Econ 52
Winter 2013 (Klenow)
Practice Questions on Topic 1
1) Consider an economy that produces two of my favorite foods: blueberries and manila
mangoes. Production and price data are:
Year
Quantity
Price
Blueberries
2012
2013
8,000 baskets
10,000 baskets
Econ 52
Winter 2013 (Klenow)
Practice Problems on Topic 2
1) Consider the data to the right showing
hours worked per worker in five rich
countries.
(a) Could rising TFP (A) explain the
general downward pattern?
(b) Could rising taxes and transfers in
Fran
Econ 52
Winter 2013 (Klenow)
Sample Questions on Consumption, Saving, and Investment
1) Explain whether each of the following appears to be empirically true: (a)
consumption growth is less volatile than income growth over the business cycle; (b)
the more
Econ 52
Winter 2013 (Klenow)
Practice Problems on Topic 4: Fiscal Policy
1) Consider a Negative Income Tax (NIT), designed to help the poor, that promises each
aid recipient a minimum income of $25,000. If the recipient earns less than $25,000, the
progra
Econ 52
Winter 2013 (Klenow)
Practice Questions on Topic 5 (Economic Growth Models)
For questions 1) through 5), consider the following closed economy:
i. Yt Ct I t A K t N t1
ii. Kt+1 = (1 )Kt + It
iii. g N and g A are constant and exogenous.
1) (a) Find
Econ 52
Spring 2013 (Klenow)
Extra Practice Problems on Topic 6
1) Suppose a countrys level of TFP is At s At* , where At* denotes the World
E
Technology Frontier (WTF, which grows at constant rate g A* ), sE represents the share
of a workers time devoted
Econ 52
Winter 2013 (Klenow)
Practice Questions on Topic 6 (and late Topic 5)
1) Consider the following numbers from a hypothetical economy over 1960-2010:
annual growth of TFP
annual growth of capital
annual growth of hours worked
annual growth of popula
Econ 52
Winter 2013 (Klenow)
Problem Set 1
Your Name: _
Your T.A.: _
Return to your T.A. in Section on FRIDAY JANUARY 18.
Each question is worth 10 points; 80 points total. Write answers in the space provided
(print one-sided so you can use up to two page
Econ 52
Winter 2013 (Klenow)
Problem Set 3
Your Name: _
Your T.A.: _
Return to your T.A. in Section on February 15th.
Each question is worth 10 points; 80 points total. Write answers in the space provided
(print one-sided so you can use up to two pages pe
Econ 52
Winter 2013 (Klenow)
Problem Set 4
Your Name: _
Your T.A.: _
Please return to your T.A. in section on March 8th. Each question is 10 points; 60 points total.
1) Lets revisit sovereign debt defaults. Some of you objected to slide 4.53 because the
e
Econ 52
Winter 2013 (Klenow)
Problem Set 4 Solutions
1) Lets revisit sovereign debt defaults. Some of you objected to slide 4.53 because the
expected haircut (loss of principal) in the event of default was simply assumed. But
we can use credit default swa
Econ 52
Spring 2010 (Klenow)
Final Exam
1) (a) Are marginal products of capital and labor more dispersed across firms in poor or
rich countries?
(b) How does the difference in dispersion show up in development accounting and why?
(c) Describe two factors
Econ 52
Winter 2013 (Klenow)
Midterm 2 solutions
1) According to the exogenous labor supply / exogenous growth / endogenous
investment / Cobb-Douglas production model, how would each of the following
affect the long run level of GDP per capita (Y/pop)? As