University of Toronto June 17, 2002 ECO 208Y - L5101 MACROECONOMIC THEORY. Term Test #1 LAST NAME FIRST NAME
|
|
- Bartholomew Stokes
- 5 years ago
- Views:
Transcription
1 Department of Economics Prof. Gustavo Indart University of Toronto June 17, 2002 SOLUTION ECO 208Y - L5101 MACROECONOMIC THEORY Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS: 1. The total time for this test is 1 hour and 50 minutes. 2. This exam consists of three parts. 3. This question booklet has 10 (ten) pages. 4. Aids allowed: a simple calculator. 5. Use pen instead of pencil. DO NOT WRITE IN THIS SPACE Part I /45 Part II /15 Part III 1. /10 2. /10 3. /10 4. /10 TOTAL /100 Page 1 of 10
2 PART I Instructions: (45 marks) Circle the most appropriate answer. Each question is worth 3 (three) marks. No deductions will be made for incorrect answers. 1. Jim s Nursery produces and sells $1,300 worth of flowers. Jim uses $200 in seeds and fertilizer, pays his workers $700 in wages, pays $100 in taxes, and pays $200 in interest on a loan. Jim s contribution to GDP is (a) $900 (b) $1,000 (c) $1,100 (d) $1, Suppose that an economy produces only bread and computers, and that price and quantity data are given in the table below. If Year 1 is the base year, the GDP (price) deflator for Year 2 is approximately Year 1 Year 2 Good Quantity Price Quantity Price Bread 30 $10 40 $15 Computers 10 $50 30 $60 (a) $100.0 (b) $126.3 (c) $131.3 (d) $ Suppose that GDP is equal to 1000, private saving is equal to 250, net export is equal to -100, and the government budget deficit is equal to 50. Private investment must equal (a) $150 (b) $200 (c) $250 (d) $ In a simple expenditure model with no government and no foreign sector, if saving is defined as S = Y and investment is I = 200, what is the equilibrium level of consumption? (a) 3,800 (b) 3,600 (c) 1,000 (d) 2, In a simple expenditure model with no government and no foreign sector, a decline in investment of $10 will lead to a $50 decline in income if (a) the MPS YD is 0.2 (b) the MPC YD is 0.5 (c) the ratio of total consumption to total income is 0.8 (d) changes in consumption divided by changes in income equal 0.2 Page 2 of 10
3 6. Assume a simple expenditure model with no foreign sector, an income tax rate (t) equal to zero, and a consumption function defined as C = (0.75)YD. When government transfer payments are decreased by 200, then income will (a) decrease by 600 (b) decrease by 800 (c) increase by 800 (d) increase by Assume the consumption function is defined as C = (0.75)YD and the marginal income tax rate is t = 0.5. If autonomous investment decreases by 50, then the budget deficit would (a) remain unaffected (b) increase by 10 (c) increase by 100 (d) increase by Assume an economy with no foreign sector, a marginal propensity to save of MPS YD = 1/10, and a marginal income tax rate of t = 1/3. What change in government purchases would lead to an increase in national income of 500? (a) 50 (b) 100 (c) 200 (d) Assume that the savings function is of the form S = YD and the income tax rate is t = What would be the effect on equilibrium income of a decrease in autonomous consumption of 50? (a) a decrease in income of 400 (b) a decrease in income of 250 (c) a decrease in income of 200 (d) a decrease in income of Assume a model with a marginal propensity to save of MPS YD = 0.2 and an income tax rate of t = What could cause the level of equilibrium income to decrease by 1000? (a) a decrease in autonomous net exports of 400 (b) a decrease in government transfer payments of 500 (c) a decrease in government purchases of 250 (d) an increase in autonomous investment of We can expect the IS-curve to get steeper, as (a) money demand becomes less sensitive to changes in the interest rate (b) the marginal propensity to save increases (c) investment becomes more sensitive to changes in the interest rate (d) the income tax rate decreases Page 3 of 10
4 12. The LM-curve becomes steeper if (a) money demand becomes less interest sensitive (b) money demand becomes more interest sensitive (c) investment becomes more interest sensitive (d) money demand becomes less sensitive to income changes 13. An increase in the interest sensitivity of money demand will (a) increase the size of the monetary policy multiplier (b) decrease the size of the monetary policy multiplier (c) make fiscal policy less effective (d) make the LM-curve steeper 14. Net exports will increase if (a) there is an increase in domestic income (b) there is a decrease in the real exchange rate (c) there is an increase in domestic inflation (d) many of our trade partners experience inflation 15. If the price level of Canadian goods is 200, the price level of foreign goods is 125, and the dollar price of foreign currency is 1.20, what is the real exchange rate? (a) 1.92 (b) 1.60 (c) 1.04 (d) 0.75 Page 4 of 10
5 PART II (15 marks) Instructions: Answer the following question in the space provided on this question booklet (if space is not sufficient, continue on the back of the previous page). Assume the money sector of a simple economy is described as follows: M = 800, P = 2 and L = 0.25Y 10i. In the expenditure sector only investment spending (I) is affected by the rate of interest (i), and the equation for the IS curve is: Y = 2,000 40i. [Note: i is measured as a percentage, e.g., a 10 percent interest rate implies i = 10.] (4) (a) Derive the equilibrium values of income (Y) and the rate of interest (i). Equilibrium Y and i are determined by the intersection of the IS and LM curves. The equation for the LM curve is derived from the condition of equilibrium in the money market: LM-curve: L = M/P ö 0.25Y 10i = 400 ö Y = 1, i Therefore, the equilibrium rate of interest is: IS = LM ö 2,000 40i = 1, i ö 80i = 400 i* = 5 And substituting in the equation for the IS curve we find that the equilibrium level of income is: Y* = 2,000 40i* = 2,000 40(5) = 2, = 1,800 (3) (b) If the size of the simple expenditure multiplier is " AE = 2, show the effect of an increase in government purchases by )G = 200 on income and the rate of interest. Since the equation for the IS curve is Y = " AE (ĀĒ bi), an increase in G causes the IS curve to shift parallel to the right by " AE )G, and given the above values this parallel shift is equal to " AE )G = 2(200) = 400. Therefore, the equation for the new IS curve is: Y = 2,400 40i. The new equilibrium income and rate of interest are determined by the intersection of the new IS curve and the Lm curve: IS = LM ö 2,400 40i = 1, i ö 80i = 800 ö I* = 10 And the new equilibrium income is: Y* = 2,400 40i* = 2,400 40(10) = 2,000. Therefore, )i = +5 and )Y = Page 5 of 10
6 (4) (c) Can you determine how much of investment is crowded out as a result of this increase in government spending? [Hint: it would be easier to answer this question if you find first the value for the interest sensitivity of investment (b).] Recall that the equation for investment spending is given by I = Ī bi and that the equation for the IS curve is given by Y = " AE (ĀĒ bi) = 2,400 40i. Therefore, " AE.b = 40 and b = 20. As the rate of interest (i) changes, investment spending (I) changes by )I = -b)i = - 20(5) = Therefore an increase in government expenditure )G = 200 crowds out investment spending by )I = However, the change in aggregate expenditure is still positive, )AE = )G + )I = = 100, and thus equilibrium income increases. (4) (d) If the money demand equation were to change to L = 0.25Y, how would your answer in (a) and (b) change? If the demand for real balances changes to L = 0.25Y, then it would be independent of the rate of interest (vertical) and we would be in the classical case. The LM curve in this case is also vertical: LM ö L = M/P ö 0.25Y = 400 ö Y = 1,600 Equilibrium income will then be determined only by the LM curve (i.e., the money market) and fiscal policy will be completely ineffective. Therefore, equilibrium income will remain unchanged at Y* = 1,600 after the increase in government expenditure. The equilibrium rate of interest will be as follows before and after the increase in government expenditure. Before the increase in government expenditure, the equation for the IS curve could be written as i = Y, and therefore i* = Y* = (1,600) = 10. After the increase in government expenditure, the equation for the IS curve could be written as i = Y, and therefore i* = Y* = (1,600) = 20. Therefore, with the demand for real balances independent of the rate of interest, the increase in government expenditure would cause equilibrium income and rate of interests to change as follows: )i = +10 and )Y = 0. This means that )AE = )G + )I = 0 and thus )G = -)I. Indeed, )I = -b)i = -20(10) = Page 6 of 10
7 PART III (40 marks) Instructions: Answer true, false, or uncertain to the following statements. Be sure to justify your answers (no justification, no marks!). Answer all questions in the space provided on question sheet (if space is not sufficient, continue on the back of the previous page). Each question is worth 10 (ten) marks. 1. In an open economy, an increase in the government budget deficit will necessarily cause a decrease in private investment. False. In an open economy, private savings (S) are used for the financing of private investment (I), the government budget deficit (G + TR - TA), and net exports (NX): S = I + (G + TR TA) + NX. Therefore, if an increase in the budget deficit is accompanied by a similar decrease (in absolute value) in net exports, investment would remain unchanged. Therefore, the statement is false since an increase in the government budget deficit does not necessarily cause a decrease in private investment. Page 7 of 10
8 2. Consider the aggregate expenditure model for a closed economy as developed in class, where taxes are independent of income (i.e., t = 0). A policy of lower taxes and unchanged budget surplus will have an expansionary effect on the economy. False. A policy of lower taxes and unchanged budget surplus means that government expenditure must decrease by the same amount as taxes have. Indeed, BS = TA (G + TR) ö )BS = )TA - )(G + TR) = )TA - )G - )TR = 0 Assuming )TR = 0, then )TA = )G; and since TA = T, )T = )G. Fiscal policy will have an expansionary effect on the economy when it causes aggregate expenditure (AE) to increase. In the aggregate expenditure model developed in class, autonomous aggregate expenditure was equal to: AE = C - ct + ctr + G + I. In our case, the change in aggregate expenditure is equal to: )AE = -c)t + )G = (1 c))g And )AE < 0 since (1 c) > 0 and )G < 0, and therefore the statement is false: A policy of lower taxes and unchanged budget surplus will have a contractionary effect on the economy. Page 8 of 10
9 3. In the fixed price model, expansionary fiscal policy is more effective when it is financed by borrowing from the public than when it is financed by borrowing from the Bank of Canada. (Show your answer graphically and explain the economics.) False. Assume the government increases its expenditure on goods and services (G). Independently of how the increase in G is financed, this will cause aggregate expenditure to increase and the IS curve to shift up to the right to IS. If the increase in G is financed by selling bonds to the public, no change in the supply of money will occur and, therefore, no shift in the LM curve will take place. Therefore, equilibrium income will increase to Y 1 in this situation. Here there is some crowding out since the rate of interest increases to i 1. If the increase in G is financed by selling bonds to the Bank of Canada, then the supply of money will increase and the LM curve will shift down to the right. Therefore, equilibrium income will increase to Y 2 > Y1 in this situation. In this case there is less crowding out since the rate of interest is lower than in the previous case -- i 2 < i 1. Therefore, the statement is false: expansionary fiscal policy is less effective when it is financed by borrowing from the public than when it is financed by borrowing from the Bank of Canada. i i 1 i 2 LM LM i 0 IS IS Y 0 Y 1 Y 2 Y Page 9 of 10
10 4. An increase in the income sensitivity of the demand for real balances (k) will reduce the effectiveness of fiscal policy. (Show your answer graphically and explain the economics.) True. Since the fiscal policy multiplier is given by: $ FP = 1 / [1 c(1 t) + bk/h], an increase in k will make $ FP smaller, and thus fiscal policy less effective. We can see this also graphically. Since the slope of the LM curve is k/h, an increase in k to k makes the LM curve steeper. The diagram shows that expansionary fiscal policy as reflected by the shift of the IS curve up to the right to IS has a greater impact on Y when the LM is flatter (because the rate of interest increases less and thus there is less crowding out). i LM(k ) LM(k) IS IS Y 0 Y 1 Y 0 Y 1 Y Page 10 of 10
SOLUTION ECO 202Y - L5101 MACROECONOMIC THEORY. Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER. University of Toronto June 18, 2002 INSTRUCTIONS:
Department of Economics Prof. Gustavo Indart University of Toronto June 18, 2002 SOLUTION ECO 202Y - L5101 MACROECONOMIC THEORY Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS: 1. The total
More informationUniversity of Toronto June 14, 2007 ECO 209Y - L5101 MACROECONOMIC THEORY. Term Test #1 DO NOT WRITE IN THIS SPACE. Part I /24.
Department of Economics Prof. Gustavo Indart University of Toronto June 14, 2007 SOLUTION ECO 209Y - L5101 MACROECONOMIC THEORY Term Test #1 LAST NAME FIRST NAME INSTRUCTIONS: STUDENT NUMBER 1. The total
More informationSOLUTION ECO 209Y MACROECONOMIC THEORY. Midterm Test #1. University of Toronto October 21, 2005 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS:
Department of Economics Prof. Gustavo Indart University of Toronto October 21, 2005 SOLUTION ECO 209Y MACROECONOMIC THEORY Midterm Test #1 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS: 1. The total
More informationSOLUTION ECO 209Y - L5101 MACROECONOMIC THEORY. Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER. University of Toronto June 22, 2004 INSTRUCTIONS:
Department of Economics Prof. Gustavo Indart University of Toronto June 22, 2004 SOLUTION ECO 209Y - L5101 MACROECONOMIC THEORY Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS: 1. The total
More informationECO 209Y L0101 MACROECONOMIC THEORY. Term Test #1
Department of Economics Prof. Gustavo Indart University of Toronto June 5, 2015 ECO 209Y L0101 MACROECONOMIC THEORY Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS: 1. The total time for
More informationECO 209Y L0101 MACROECONOMIC THEORY. Term Test #2
Department of Economics Prof. Gustavo Indart University of Toronto June 25, 2012 ECO 209Y L0101 MACROECONOMIC THEORY Term Test #2 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS: 1. The total time for
More informationUniversity of Toronto January 25, 2007 ECO 209Y MACROECONOMIC THEORY. Term Test #2 L0101 L0201 L0401 L5101 MW MW 1-2 MW 2-3 W 6-8
Department of Economics Prof. Gustavo Indart University of Toronto January 25, 2007 SOLUTION ECO 209Y MACROECONOMIC THEORY Term Test #2 LAST NAME FIRST NAME STUDENT NUMBER Circle your section of the course:
More informationSOLUTIONS ECO 209Y (L0201/L0401) MACROECONOMIC THEORY. Midterm Test #3. University of Toronto February 11, 2005 LAST NAME FIRST NAME STUDENT NUMBER
Department of Economics Prof. Gustavo Indart University of Toronto February 11, 2005 SOLUTIONS ECO 209Y (L0201/L0401) MACROECONOMIC THEORY Midterm Test #3 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS:
More informationECO 209Y MACROECONOMIC THEORY AND POLICY
Department of Economics Prof. Gustavo Indart University of Toronto December 3, 2014 ECO 209Y MACROECONOMIC THEORY AND POLICY Term Test #2 LAST NAME FIRST NAME STUDENT NUMBER Indicate your section of the
More informationECO 209Y MACROECONOMIC THEORY AND POLICY
Department of Economics Prof. Gustavo Indart University of Toronto October 30, 2015 ECO 209Y MACROECONOMIC THEORY AND POLICY Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER Indicate your section of the
More informationECO 209Y MACROECONOMIC THEORY AND POLICY
Department of Economics Prof. Gustavo Indart University of Toronto February 14, 2014 ECO 209Y MACROECONOMIC THEORY AND POLICY Term Test # 3 LAST NAME FIRST NAME STUDENT NUMBER Indicate your section of
More informationECO 209Y - L5101 MACROECONOMIC THEORY. Term Test #2
Department of Economics Prof. Gustavo Indart University of Toronto July 19, 2005 SOLUTIONS ECO 209Y - L5101 MACROECONOMIC THEORY Term Test #2 LAST NAME FIRST NAME INSTRUCTIONS: STUDENT NUMBER 1. The total
More informationUniversity of Toronto July 27, 2012 ECO 209Y L0101 MACROECONOMIC THEORY. Term Test #3
Department of Economics Prof. Gustavo Indart University of Toronto July 27, 2012 SOLUTIONS ECO 209Y L0101 MACROECONOMIC THEORY Term Test #3 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS: 1. The total
More informationSOLUTIONS. ECO 209Y - L5101 MACROECONOMIC THEORY Term Test 2 LAST NAME FIRST NAME STUDENT NUMBER. University of Toronto January 26, 2005 INSTRUCTIONS:
Department of Economics Prof. Gustavo Indart University of Toronto January 26, 2005 SOLUTIONS ECO 209Y - L5101 MACROECONOMIC THEORY Term Test 2 LAST NAME FIRST NAME INSTRUCTIONS: STUDENT NUMBER 1. The
More informationUniversity of Toronto July 21, 2010 ECO 209Y L0101 MACROECONOMIC THEORY. Term Test #2
Department of Economics Prof. Gustavo Indart University of Toronto July 21, 2010 SOLUTIONS ECO 209Y L0101 MACROECONOMIC THEORY Term Test #2 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS: 1. The total
More informationUniversity of Toronto October 28, 2011 ECO 209Y MACROECONOMIC THEORY AND POLICY. Term Test #1 L0101 L0301 L0401 M 2-4 W 2-4 R 2-4
Department of Economics Prof. Gustavo Indart University of Toronto October 28, 2011 ECO 209Y MACROECONOMIC THEORY AND POLICY SOLUTIONS Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER Circle your section
More informationUniversity of Toronto December 3, 2010 ECO 209Y MACROECONOMIC THEORY AND POLICY. Term Test #2 L0101 L0301 L0401 M 2-4 W 2-4 R 2-4
Department of Economics Prof. Gustavo Indart University of Toronto December 3, 2010 ECO 209Y MACROECONOMIC THEORY AND POLICY SOLUTIONS Term Test #2 LAST NAME FIRST NAME STUDENT NUMBER Circle your section
More informationUniversity of Toronto June 6, 2014 ECO 209Y L0101 MACROECONOMIC THEORY. Term Test #1
Department of Economics Prof. Gustavo Indart University of Toronto June 6, 2014 ECO 209Y L0101 MACROECONOMIC THEORY SOLUTIONS Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS: 1. The total
More informationUniversity of Toronto July 27, 2006 ECO 209Y - L5101 MACROECONOMIC THEORY. Term Test #2 DO NOT WRITE IN THIS SPACE. Part I /30.
Department of Economics Prof. Gustavo Indart University of Toronto July 27, 2006 SOLUTION ECO 209Y - L5101 MACROECONOMIC THEORY Term Test #2 LAST NAME FIRST NAME INSTRUCTIONS: STUDENT NUMBER 1. The total
More informationECO 209Y MACROECONOMIC THEORY AND POLICY
Department of Economics Prof. Gustavo Indart University of Toronto March 14, 2007 ECO 209Y MACROECONOMIC THEORY AND POLICY SOLUTION Term Test #3 LAST NAME FIRST NAME STUDENT NUMBER Circle the section of
More informationECO 209Y MACROECONOMIC THEORY AND POLICY
Department of Economics Prof. Gustavo Indart University of Toronto October 18, 2013 ECO 209Y MACROECONOMIC THEORY AND POLICY Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER Indicate your section of the
More informationECO 209Y MACROECONOMIC THEORY. Term Test #1
Department of Economics Prof. Gustavo Indart University of Toronto June 9, 2017 ECO 209Y MACROECONOMIC THEORY Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS: 1. The total time for this test
More informationUNIVERSITY OF TORONTO Faculty of Arts and Science. August Examination 2006 ECO 209Y
UNIVERSITY OF TORONTO Faculty of Arts and Science August Examination 2006 ECO 209Y Duration: 2 hours Examination Aids allowed: Non-programmable calculators only INSTRUCTIONS: Students are required to answer
More informationECO 209Y MACROECONOMIC THEORY AND POLICY
Department of Economics Prof. Gustavo Indart University of Toronto October 22, 2010 ECO 209Y MACROECONOMIC THEORY AND POLICY Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER Circle your section of the
More informationECO 209Y MACROECONOMIC THEORY AND POLICY LECTURE 3: AGGREGATE EXPENDITURE AND EQUILIBRIUM INCOME
ECO 209Y MACROECONOMIC THEORY AND POLICY LECTURE 3: AGGREGATE EXPENDITURE AND EQUILIBRIUM INCOME Gustavo Indart Slide 1 ASSUMPTIONS We will assume that: There is no depreciation There are no indirect taxes
More informationUniversity of Toronto July 15, 2016 ECO 209Y L0101 MACROECONOMIC THEORY. Term Test #2
Department of Economics Prof. Gustavo Indart University of Toronto July 15, 2016 SOLUTIONS ECO 209Y L0101 MACROECONOMIC THEORY Term Test #2 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS: 1. The total
More informationECO 209Y MACROECONOMIC THEORY AND POLICY
Department of Economics Prof. Gustavo Indart University of Toronto December 7, 2011 ECO 209Y MACROECONOMIC THEORY AND POLICY Term Test #2 LAST NAME FIRST NAME STUDENT NUMBER Circle your section of the
More informationECO 209Y MACROECONOMIC THEORY AND POLICY
Department of Economics Prof. Gustavo Indart University of Toronto December 4, 2013 ECO 209Y MACROECONOMIC THEORY AND POLICY Term Test #2 LAST NAME FIRST NAME STUDENT NUMBER Indicate your section of the
More informationECO 209Y L0101 MACROECONOMIC THEORY. Term Test #1
Department of Economics Prof. Gustavo Indart University of Toronto June 10, 2016 ECO 209Y L0101 MACROECONOMIC THEORY Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS: 1. The total time for
More informationUNIVERSITY OF TORONTO Faculty of Arts and Science APRIL/MAY EXAMINATIONS 2006 ECO 209Y1 Y. Duration: 2 hours
UNIVERSITY OF TORONTO Faculty of Arts and Science APRIL/MAY EXAMINATIONS 2006 ECO 209Y1 Y Duration: 2 hours Examination Aids allowed: Non-programmable calculator only There are five parts to the exam PART
More informationUniversity of Toronto June 8, 2012 ECO 209Y L0101 MACROECONOMIC THEORY. Term Test #1
Department of Economics Prof. Gustavo Indart University of Toronto June 8, 2012 SOLUTIONS ECO 209Y L0101 MACROECONOMIC THEORY Term Test #1 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS: 1. The total
More informationMacroeconomic Theory and Policy
ECO 209Y Macroeconomic Theory and Policy Lecture 3: Aggregate Expenditure and Equilibrium Income Gustavo Indart Slide 1 Assumptions We will assume that: There is no depreciation There are no indirect taxes
More informationECO 2013: Macroeconomics Valencia Community College
ECO 2013: Macroeconomics Valencia Community College Exam 3 Fall 2008 1. The most important determinant of consumer spending is: A. the level of household debt. B. consumer expectations. C. the stock of
More informationOVERVIEW. 1. This chapter presents a graphical approach to the determination of income. Two different graphical approaches are provided.
24 KEYNESIAN CROSS OVERVIEW 1. This chapter presents a graphical approach to the determination of income. Two different graphical approaches are provided. 2. Initially, both the consumption function and
More informationUNIVERSITY OF TORONTO Faculty of Arts and Science. April Examination 2016 ECO 209Y. Duration: 2 hours
UNIVERSITY OF TORONTO Faculty of Arts and Science April Examination 2016 ECO 209Y Duration: 2 hours Examination Aids allowed: Non-programmable calculators only LAST NAME FIRST NAME STUDENT NUMBER DO NOT
More informationECO 100Y L0101 INTRODUCTION TO ECONOMICS. Midterm Test #2
Department of Economics Prof. Gustavo Indart University of Toronto December 3, 2004 SOLUTIONS ECO 100Y L0101 INTRODUCTION TO ECONOMICS Midterm Test #2 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS:
More informationMacroeconomic Theory and Policy
ECO 209 Macroeconomic Theory and Policy Lecture 8: The Open Economy with Flexible Exchange Rates Gustavo Indart Slide 1 Assumptions We will assume that initially the goods market, the money market, and
More informationECO 209Y MACROECONOMIC THEORY AND POLICY LECTURE 12: THE DERIVATION OF THE AGGREGATE DEMAND CURVE
ECO 209 MACROECONOMIC THEOR AND POLIC LECTURE 12: THE DERIVATION OF THE AGGREGATE DEMAND CURVE Gustavo Indart Slide 1 FIXED-PRICE MODEL Everything we have done in the IS-LM model has been in terms of demand,
More informationName: Student # : Section: RYERSON UNIVERSITY Department of Economics
Name: Student # : Section: RYERSON UNIVERSITY Department of Economics ECN 204 (Section-7) TERM TEST 2 November, 2004 Instructor: Sharif F. Khan Time Limit: 50 minutes Total Pages Including the Cover Sheet:
More informationSOLUTIONS ECO 202Y MACROECONOMIC THEORY. Midterm Test #3. University of Toronto March 19, 2003 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS:
Department of Economics Prof. Gustavo Indart University of Toronto March 19, 2003 SOLUTIONS ECO 202Y MACROECONOMIC THEORY Midterm Test #3 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS: 1. The total
More informationECO 209Y MACROECONOMIC THEORY AND POLICY LECTURE 5: THE IS-LM MODEL
ECO 209Y MACROECONOMIC THEORY AND POLICY LECTURE 5: THE IS-LM MODEL Gustavo Indart Slide 1 INTRODUCTION OF THE INTEREST RATE We introduce the rate of interest (i) in three stages First, we take i as an
More informationKOÇ UNIVERSITY ECON 202 Macroeconomics Fall Problem Set VI C = (Y T) I = 380 G = 400 T = 0.20Y Y = C + I + G.
KOÇ UNIVERSITY ECON 202 Macroeconomics Fall 2007 Problem Set VI 1. Consider the following model of an economy: C = 20 + 0.75(Y T) I = 380 G = 400 T = 0.20Y Y = C + I + G. (a) What is the value of the MPC
More informationECO 209Y MACROECONOMIC THEORY AND POLICY. Term Test #2. December 13, 2017
ECO 209Y MACROECONOMIC THEORY AND POLICY Term Test #2 December 13, 2017 U of T E-MAIL: @MAIL.UTORONTO.CA SURNAME (LAST NAME): GIVEN NAME (FIRST NAME): UTORID (e.g., LIHAO118): INSTRUCTIONS: The total time
More informationYork University. Suggested Solutions
York University Atkinson Faculty of Liberal and professional Studies Department of Economics ECON1010C Term Test 2 July 20, 2005 Instructor: Sharif F. Khan Suggested Solutions PART A 1. B 2. A 3. D 4.
More informationECO 209Y MACROECONOMIC THEORY AND POLICY LECTURE 5: THE IS-LM MODEL
ECO 209Y MACROECONOMIC THEORY AND POLICY LECTURE 5: THE IS-LM MODEL Gustavo Indart Slide 1 INTRODUCTION OF THE INTEREST RATE We introduce the rate of interest (i) in three stages First, we take i as an
More informationUNIVERSITY OF TORONTO Faculty of Arts and Science. August Examination 2017 ECO 209Y. Duration: 2 hours
UNIVERSITY OF TORONTO Faculty of Arts and Science August Examination 2017 ECO 209Y Duration: 2 hours Examination Aids allowed: A non-programmable calculator LAST NAME FIRST NAME STUDENT NUMBER DO NOT WRITE
More informationECO 100Y L0201 INTRODUCTION TO ECONOMICS. Midterm Test # 4
Department of Economics Prof. Gustavo Indart University of Toronto March 20, 2009 ECO 100Y L0201 INTRODUCTION TO ECONOMICS Midterm Test # 4 LAST NAME FIRST NAME STUDENT NUMBER Instructions: Multiple choice
More information14.02 Principles of Macroeconomics Problem Set # 2, Answers
14.0 Principles of Macroeconomics Problem Set #, Answers Part I 1. False. The multiplier is 1/ [1- c 1 (1- t)]. The effect of an increase in autonomous spending is dampened because taxes respond proportionally
More informationUNIVERSITY OF TORONTO Faculty of Arts and Science. August Examination 2013 ECO 209Y. Duration: 2 hours
UNIVERSITY OF TORONTO Faculty of Arts and Science August Examination 2013 ECO 209Y Duration: 2 hours Examination Aids allowed: Non-programmable calculators only LAST NAME FIRST NAME STUDENT NUMBER DO NOT
More informationSuggested Solutions to Assignment 3
ECON 1010C Principles of Macroeconomics Instructor: Sharif F. Khan Department of Economics Atkinson College York University Summer 2005 Suggested Solutions to Assignment 3 Part A Multiple-Choice Questions
More informationEconomics 1012A: Introduction to Macroeconomics FALL 2007 Dr. R. E. Mueller Third Midterm Examination November 15, 2007
Economics 1012A: Introduction to Macroeconomics FALL 2007 Dr. R. E. Mueller Third Midterm Examination November 15, 2007 Answer all of the following questions by selecting the most appropriate answer on
More informationLearning Objectives. 1. Describe how the government budget surplus is related to national income.
Learning Objectives 1of 28 1. Describe how the government budget surplus is related to national income. 2. Explain how net exports are related to national income. 3. Distinguish between the marginal propensity
More informationECO 209Y MACROECONOMIC THEORY AND POLICY. Term Test #2. December 13, 2017
ECO 209Y MACROECONOMIC THEORY AND POLICY Term Test #2 December 13, 2017 U of T E-MAIL: @MAIL.UTORONTO.CA SURNAME (LAST NAME): GIVEN NAME (FIRST NAME): UTORID (e.g., LIHAO118): INSTRUCTIONS: The total time
More informationECS2602. Tutorial letter 201/1/2018. Macroeconomics. Department of Economics First semester ECS2602/201/1/2018
ECS2602/201/1/2018 Tutorial letter 201/1/2018 Macroeconomics ECS2602 Department of Economics First semester Answers to Assignment 01 Answers to Assignment 02 Answers to Self-assessment Assignment 04 BARCODE
More informationMacroeconomic Theory and Policy
ECO 209Y Macroeconomic Theory and Policy Lecture 4: The IS LM Model Gustavo Indart Slide 1 Introduction of the Interest Rate We will introduce the rate of interest into our model in three stages First,
More informationECON 3312 Macroeconomics Exam 2 Spring 2017 Prof. Crowder
ECON 3312 Macroeconomics Exam 2 Spring 2017 Prof. Crowder Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Suppose the economy is currently
More informationECO 209Y MACROECONOMIC THEORY AND POLICY
Department of Economics Prof. Gustavo Indart University of Toronto February 26, 2016 ECO 209Y MACROECONOMIC THEORY AND POLICY Term Test # 3 LAST NAME FIRST NAME STUDENT NUMBER Indicate your section of
More informationPrinciples of Macroeconomics Prof. Yamin Ahmad ECON 202 Spring 2007
Principles of Macroeconomics Prof. Yamin Ahmad ECON 202 Spring 2007 Midterm Exam II Name Id # Instructions: There are two parts to this midterm. Part A consists of multiple choice questions. Please mark
More informationProfessor Christina Romer SUGGESTED ANSWERS TO PROBLEM SET 5
Economics 2 Spring 2016 Professor Christina Romer Professor David Romer SUGGESTED ANSWERS TO PROBLEM SET 5 1. The left-hand diagram below shows the situation when there is a negotiated real wage,, that
More informationECON2123-L5 Macroeconomics Mid-term 1 Part 1
ECON2123-L5 Macroeconomics Mid-term 1 Part 1 1. For this question, assume that 1980 is the base year. Given macroeconomic conditions in the United States over the past three decades, we know that A) nominal
More informationExam 3 ECON Thurs. Nov. 14, :30 a.m. Form A
Exam 3 ECON 2105 Thurs. Nov. 14, 2002 9:30 a.m. Name: ID #: Form A There are 30 multiple choice questions, worth 2.5 points each (for a total of 75 points). The short answer questions are worth 25 points.
More informationECO209Y MACROECONOMIC THEORY Solution to Problem Set 8 (Odd numbers only)
Prof. Gustavo Indart Department of Economics University of Toronto ECO209Y MACROECONOMIC THEORY Solution to Problem Set 8 (Odd numbers only) 1. a) First we find the IS curve. The AE curve is: AE = C +
More informationUNIVERSITY OF TORONTO Faculty of Arts and Science APRIL/MAY EXAMINATIONS 2012 ECO 209Y1 Y. Duration: 2 hours
UNIVERSITY OF TORONTO Faculty of Arts and Science APRIL/MAY EXAMINATIONS 2012 ECO 209Y1 Y Duration: 2 hours Examination Aids allowed: Non-programmable calculator only There are four parts to the exam:
More informationPrinciple of Macroeconomics, Summer B Practice Exam
Principle of Macroeconomics, Summer B 2017 Practice Exam 1) If real GDP in a small country in 2015 is $8 billion and real GDP in the same country in 2016 is $8.3 billion, the growth rate of real GDP between
More informationEC and MIDTERM EXAM I. March 26, 2015
EC102.03 and 102.05 Spring 2015 Instructions: MIDTERM EXAM I March 26, 2015 NAME: ID #: You have 80 minutes to complete the exam. There will be no extensions. The exam consists of 40 multiple choice questions.
More informationProblem Set #2. Intermediate Macroeconomics 101 Due 20/8/12
Problem Set #2 Intermediate Macroeconomics 101 Due 20/8/12 Question 1. (Ch3. Q9) The paradox of saving revisited You should be able to complete this question without doing any algebra, although you may
More informationECO 209Y MACROECONOMIC THEORY AND POLICY LECTURE 9: THE OPEN ECONOMY WITH FLEXIBLE EXCHANGE RATES
ECO 209 MACROECONOMIC THEOR AND POLIC LECTURE 9: THE OPEN ECONOM WITH FLEXIBLE EXCHANGE RATES Gustavo Indart Slide 1 ASSUMPTIONS We will assume that initially the goods market, the money market, and the
More informationFEEDBACK TUTORIAL LETTER ASSIGNMENT 2 INTERMEDIATE MACRO ECONOMICS IMA612S
FEEDBACK TUTORIAL LETTER 2 nd SEMESTER 2017 ASSIGNMENT 2 INTERMEDIATE MACRO ECONOMICS 1 ASSIGNMENT 2 SECTION A [20 marks] QUESTION 1 [20 marks, 2 marks each] For each of the following questions, select
More informationPrint last name: Solution Given name: Student number: Section number:
Department of Economics University of Toronto at Mississauga ECO202Y5Y Macroeconomic Theory and Policy Summer Session: June 2003 Test One Instructor: Xinhua Gu Date: Tuesday, June 10, 2003 Time allowed:
More informationTutorial letter 102/3/2018
ECS2602/102/3/2018 Tutorial letter 102/3/2018 Macroeconomics 2 ECS2602 Department of Economics Workbook: Activities for learning units 1 to 9 Define tomorrow 2 IMPORTANT VERBS As a student, you should
More informationChapter 22. Adding Government and Trade to the Simple Macro Model. In this chapter you will learn to. Introducing Government. Government Purchases
Chapter 22 Adding Government and Trade to the Simple Macro Model In this chapter you will learn to 1. Describe the relationship between national income and government purchases and tax revenues. 2. Describe
More informationNotes for Econ FALL 2010 Midterm 1 Exam
Notes for Econ 302-001 FALL 2010 Midterm 1 Exam The Fall 2010 Econ 302-001 course used Hall and Papell, Macroeconomics (Norton) as a textbook. The notation differs from Blanchard, Macroeconomics 5/2 (Pearson).
More informationPrint last name: Solution Given name: Student number: Section number
Department of Economics University of Toronto at Mississauga ECO202Y5Y Macroeconomic Theory and Policy July 2003 Test Two Dr. Gu Date: Tuesday, July 8, 2003 Time allowed: Two hours Aids allowed: Calculator
More informationEconomics 102 Discussion Handout Week 14 Spring Aggregate Supply and Demand: Summary
Economics 102 Discussion Handout Week 14 Spring 2018 Aggregate Supply and Demand: Summary The Aggregate Demand Curve The aggregate demand curve (AD) shows the relationship between the aggregate price level
More informationa) Calculate the value of government savings (Sg). Is the government running a budget deficit or a budget surplus? Show how you got your answer.
Economics 102 Spring 2018 Answers to Homework #5 Due 5/3/2018 Directions: The homework will be collected in a box before the lecture. Please place your name, TA name and section number on top of the homework
More informationECO 209Y MACROECONOMIC THEORY AND POLICY. Term Test #3. February 12, 2018
ECO 209Y MACROECONOMIC THEORY AND POLICY Term Test #3 February 12, 2018 U of T E-MAIL: @MAIL.UTORONTO.CA SURNAME (LAST NAME): GIVEN NAME (FIRST NAME): UTORID (e.g., LIHAO118): INSTRUCTIONS: The total time
More informationIntermediate Macroeconomics-ECO 3203
Intermediate Macroeconomics-ECO 3203 Homework 2 Solution Sample, Summer 2018 Instructor, Yun Wang Instructions: The full points of this homework exercise is 100. Show all your works (necessary steps to
More informationIntermediate Macroeconomic Theory II, Fall 2006 Solutions to Problem Set 4 (35 points)
Intermediate Macroeconomic Theory II, Fall 2006 Solutions to Problem Set 4 (35 points) 1. (16 points) For all of the questions below, draw the relevant curves. (a) (2 points) Suppose that the government
More informationECON Intermediate Macroeconomics (Professor Gordon) First Midterm Examination: Winter 2017 Answer sheet
ECON 311 - Intermediate Macroeconomics (Professor Gordon) First Midterm Examination: Winter 2017 Answer sheet YOUR NAME: Student ID: Circle the TA session you attend: Bence 3PM Burke - 3PM Chris - 3PM
More informationProfessor Christina Romer SUGGESTED ANSWERS TO PROBLEM SET 5
Economics 2 Spring 2017 Professor Christina Romer Professor David Romer SUGGESTED ANSWERS TO PROBLEM SET 5 1. The tool we use to analyze the determination of the normal real interest rate and normal investment
More informationSAMPLE EXAM QUESTIONS FOR FALL 2018 ECON3310 MIDTERM 2
SAMPLE EXAM QUESTIONS FOR FALL 2018 ECON3310 MIDTERM 2 Contents: Chs 5, 6, 8, 9, 10, 11 and 12. PART I. Short questions: 3 out of 4 (30% of total marks) 1. Assume that in a small open economy where full
More informationEconomics 102 Discussion Handout Week 14 Spring Aggregate Supply and Demand: Summary
Economics 102 Discussion Handout Week 14 Spring 2018 Aggregate Supply and Demand: Summary The Aggregate Demand Curve The aggregate demand curve (AD) shows the relationship between the aggregate price level
More informationHomework Assignment #6. Due Tuesday, 11/28/06. Multiple Choice Questions:
Homework Assignment #6. Due Tuesday, 11/28/06 Multiple Choice Questions: 1. When the inflation rate is expected to be zero, Steve plans to lend money if the interest rate is at least 4 percent a year and
More informationECO 209Y MACROECONOMIC THEORY AND POLICY LECTURE 9: INTRODUCTION TO THE AD-AS MODEL
ECO 209 MACROECONOMIC THEOR AND OLIC LECTURE 9: INTRODUCTION TO THE AD- MODEL Gustavo Indart Slide 1 DEMAND IN THE FIXED-RICE MODEL Everything we have done in the IS-LM model has been in terms of demand,
More informationPrint last name: Given name: Student number: Section number
Department of Economics University of Toronto at Mississauga ECO202Y5Y Macroeconomic Theory and Policy December 2002 Test Two Instructor: X. Gu Date: Friday, December 6, 2002 Time allowed: Two hours Aids
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
ECON 3312 Mcroeconomics Exam 2 Fall 2016 Prof. Crowder Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) If output is currently 1000 below full
More informationPractice Problems 30-32
Practice Problems 30-32 1. The budget balance is calculated as: A. T G TR B. T + G TR C. T G + TR D. T + G + TR E. TR T G 2. The government budget balance equals: A. Taxes + Government purchases + Government
More informationAGGREGATE EXPENDITURE AND EQUILIBRIUM OUTPUT. Chapter 20
1 AGGREGATE EXPENDITURE AND EQUILIBRIUM OUTPUT Chapter 20 AGGREGATE EXPENDITURE AND EQUILIBRIUM OUTPUT The level of GDP, the overall price level, and the level of employment three chief concerns of macroeconomists
More informationECO 100Y INTRODUCTION TO ECONOMICS
Prof. Gustavo Indart Department of Economics University of Toronto ECO 100Y INTRODUCTION TO ECONOMICS Lecture 16. THE DEMAND FOR MONEY AND EQUILIBRIUM IN THE MONEY MARKET We will assume that there are
More informationPart I (45 points; Mark your answers in a SCANTRON)
Final Examination Name: ECON 4020/ SPRING 2005 Instructor: Dr. M. Nirei 1:30 3:20 pm, April 28, 2005 Part I (45 points; Mark your answers in a SCANTRON) (1) The GDP deflator is equal to: a. the ratio of
More information1.) (10 points) Use the quantity theory of money equation to solve the following problem:
Exam #2 (ANSWERS) ECNS 303 Name 1.) (10 points) Use the quantity theory of money equation to solve the following problem: Consider the market for bread. Suppose 50 loaves of bread are sold in a year at
More informationKING S UNIVERSITY COLLEGE. Economics 1022B (570 & 574) Review Questions for Chapter 27
KING S UNIVERSITY COLLEGE Economics 1022B (570 & 574) G. Copplestone Review Questions for Chapter 27 Multiple Choice Questions: 1) If the marginal propensity to consume is 0.85, what change in consumption
More informationPre-Test Chapter 9 ed17
Pre-Test Chapter 9 ed17 Multiple Choice Questions 1. Which of the following statements is incorrect? A. Given the economy's MPS, a $15 billion reduction in government spending will reduce the equilibrium
More informationA. unchanged decrease B. surplus decrease C. unchanged no change D. surplus increase E. unchanged increase A. A B. B C. C D. D E. E.
AP Macroeconomics Test (Answers on last Page) 1. Which of the following correctly describes the components of Aggregate Demand? A. Consumption expenditures + Investment expenditures + Government expenditures
More informationQuestions and Answers
Questions and Answers Chapter 1 Q1: MCQ Aggregate demand 1. The aggregate demand curve: A) is up-sloping because a higher price level is necessary to make production profitable as production costs rise.
More informationTable 9-2. Base Year (2006) 2013 Product Quantity Price Price Milk 50 $2 $3 Bread 100 $3 $3.50
1) The advice to "keep searching, there are plenty of jobs around here for which you are qualified," would be most appropriate for which of the following types of unemployment? A) frictional unemployment
More informationY C T
Economics 102 Fall 2017 Homework #5 Due 12/12/2017 Directions: The homework will be collected in a box before the lecture. Please place your name, TA name and section number on top of the homework (legibly).
More informationEcon 102 Exam 2 Name ID Section Number
Econ 102 Exam 2 Name ID Section Number 1. Suppose investment spending increases by $50 billion and as a result the equilibrium income increases by $200 billion. The investment multiplier is: A) 10. B)
More informationExamination information
ECS2602/103/3/2018 Tutorial Letter 103/3/2018 Macroeconomics ECS2602 Semesters 1 & 2 Department of Economics Examination information How to answer macroeconomics questions Comments on the Oct/Nov 2015
More information1. STUDENTS WILL BE ABLE TO DEFINE AND EXPLAIN THE CONCEPT OF FISCAL POLICY
LIGHTHOUSE CPA SOCIAL SCIENCES DEPARTMENT AP ECONOMICS STUDY GUIDE # 18 - FISCAL POLICY & MANAGEMENT CHAPTER LEARNING OBJECTIVES STUDENTS WILL BE ABLE TO DEFINE AND EXPLAIN THE CONCEPT OF FISCAL POLICY
More information