Download Essay Questions: Please answer all of the essay question using a

Essay Questions: Please answer all of the essay question using a Word doc. format. Number
each in order (no skipping around). Save the file using the words “final_essay_your last
name.” Keep your answers to short paragraphs where possible. Please, no essays.
Total points = 70
1. You are given the following information.
Exports
Imports
Capital inflows
Capital outflows
X = 1,300
M = 2,000
ki = 800
ko = 300
Compute net exports, net capital flows, and the balance of payments. (7 pts.)
2. The U.S. imports Japanese cars with a domestic price of 5,000,000 yen and the yen/dollar
exchange rate is 120 on January 1, 2003. On January 1, 2004 the yen/dollar exchange rate is 125.
What is the dollar price of the cars on January 1, 2003? What is the dollar price of the cars on
January 1, 2004? (5 pts.)
3. Describe the basic characteristics of the monopoly model and explain how these characteristics
affect the ability of a monopolist to earn pure economic profit in both the short run and long run. (7
pts.)
4. The U.S. economy is experiencing a decrease in home prices and consumer wealth, a credit crisis
in the financial markets, and declining consumer and business confidence. What components of
aggregate demand are affected and what is the impact on real output? What are the fiscal and
monetary options? (10 pts.)
5. Many restaurants offer "early-bird specials " to dinner customers. These specials consist of a
significant price reduction on selected menu items purchased before some pre-determined time, e.g.,
6 p.m. Is such a practice a form of price discrimination? If so, what type? (5 pts.)
6. Are the following outputs considered an intermediate good, a final good, or neither for purposes
of calculating GDP in the current year? For each answer, just say intermediate good, final good, or
neither.
a. New tires put on a new Corvette at Big O Tire store
b. The net sales price of a home built in 1990 when it is resold in 1997
c. The commission earned by a stock broker on the sale of stock
d. The net price that is paid for 1000 shares of stock in Dell (6 pts.)
7. Explain the impact on interest rates of a contractionary monetary policy. (6 pts.)
8. Using the foreign exchange market diagram in the textbook, explain the impact of foreign interest
rates that exceed U.S. interest rates. (8 pts.)
9. In the basic GDP model of AD and AS, what is the relationship between unemployment and the
price level? (6 pts.)
10. You are given the following information on the macroeconomy (in millions dollars):
Consumption:
250 + 0.50Y
Investment: 100 + 0.10Y
Government Spending
400
Exports
50
Imports
50 + 0.25Y
Compute the equilibrium level of income, the size of the multiplier, and the change in equilibrium
income for a decrease in autonomous investment of $75 million. (10 pts.)