Download Macroeconomics/Northrop/Fall 2001/First Exam

Macroeconomics/Northrop/Spring 2002/Third Exam
Name:
Please answer the questions in order.
Fully label all graphs.
Be sure and answer all parts.
1.
Explain the two alternative approaches to measuring the level of GDP. (10)
2.
Graph the Solow growth model. (5)
3.
a. Redraw the Solow growth model and use the graph to illustrate and explain the
"predictions" of the model.
b. What is the evidence concerning whether or not each of the predictions has been
realized? (14)
4.
List three of the policies that Colander suggests to increase output per capita. (9)
5.
a. Graph aggregate demand.
b. Explain the wealth effect.
c. How does the wealth effect relate to the graph of aggregate demand?
d. Explain (as Colander does) how an increase in foreign income relates to the graph of
aggregate demand. (15)
6.
a. Graph short run aggregate supply.
b. State what makes it shift. (6)
7.
a. Graph long run aggregate supply.
b. State what makes it shift. (6)
8.
a. Graph a recessionary gap.
b. Explain what will happen according to classical economists. (15)
Please write your pledge here, on this page:
Macroeconomics/Northrop/Spring 2002/Second Exam
Name:
Please answer the questions in order.
1.
2.
3.
4.
5.
6.
7.
Simply list the four main elements of the Bretton Woods agreements. (6 pts)
When deflating GDP, which price index is used? (2)
What does it mean to be officially unemployed? (3)
Define "real gross domestic product," indicating the meanings of both "real" and "GDP." (4)
Distinguish (in the ways we did in the class) between the long run and the short run. (8)
Briefly explain the reasons why the targeted rate of unemployment is not zero percent. (8)
For what reasons did the technical discussions of how to change the CPI become a matter of public
debate? In other words, who (all) has a stake in the CPI measure, and what stake do they have? (6)
8. (a) What was the main argument of Professor Stiglitz?
(b) As he began to make his main argument he told of his experience with one particular country.
Name the country and briefly relate what his experience and observations were. (5)
9. Assume the basket prices:
1990
$1200
1991
1300
1992
1350
Let 1990 be the base year.
(a) Find the inflation rates as we did in class. Clearly show all your work, including any formulas
that you may use.
(b) Based on the inflation rates that you found, did prices rise across the entire time period? Briefly
explain/clarify. (13 pts)
10. For each of the following chapters from Affluenza, answer (a) and (b) below:
Our expectations
Our families
"Dilated pupils"
(a). What is the main argument of the chapter?
(b). List three specific, pertinent, and poignant points/facts/ideas that were used to support the main
argument. (15 for each chapter)
Have a relaxed and safe break!
Assume the basket prices:
1994
$550
Let 1995 be the base year.
1995
600
Find the price index for each year, and interpret your answers.
1996
660
Find the inflation rates, where possible, and interpret your
1997
700
answers.
Assume the following:
Nominal GDP
Year
(in trillions)
1981
$4.0
1982
$4.2
1983
$5.0
Price
index
100
105
110
Find real GDP for each year, and interpret your results.
Assume the basket prices:
1994
$550
Let 1995 be the base year.
1995
600
Find the price index for each year, and interpret your answers.
1996
660
Find the inflation rates, where possible, and interpret your
1997
700
answers.
Assume the following:
Nominal GDP
Year
(in trillions)
1981
$4.0
1982
$4.2
1983
$5.0
Price
index
100
105
110
Find real GDP for each year, and interpret your results.
Assume the basket prices:
1994
$550
Let 1995 be the base year.
1995
600
Find the price index for each year, and interpret your answers.
1996
660
Find the inflation rates, where possible, and interpret your
1997
700
answers.
Assume the following:
Nominal GDP
Year
(in trillions)
1981
$4.0
1982
$4.2
1983
$5.0
Price
index
100
105
110
Find real GDP for each year, and interpret your results.
Macroeconomics/Northrop/Spring 2002/First Exam



Name:
Please answer the questions in order.
Construct LARGE graphs, and fully label them.
Take care to answer all parts to each question.
1. (a) Graph the US demand and supply for cars that are produced in the US. Label your
demand curve "Dwith free trade" and label your supply curve "Swith free trade." Assume that the
international market works freely. Indicate the equilibrium values along the horizontal and
vertical axes of your graph. Indicate on your graph the consumer surplus and the producer
surplus.
(b) Redraw your graph from above, but leave off the consumer surplus. Now assume that a
quota is placed on cars produced outside the US. Indicate on your graph the (old and)
equilibrium values on the axes, and the old and new producer surpluses.
(c) In what units are consumer surplus and producer surplus measured?
2. Assume the following:
Country A
Country B
Output per worker
Computers
Grain
5
15
1
10
(a) State the law of comparative advantage.
(b) In what good(s), if any, does B have an absolute advantage?
(c) According to the model of comparative advantage, would trade be mutually beneficial
for nations A and B?
If yes, what should each country export? Show your work.
If no, fully explain why not.
(d) According to classroom presentations, what specific assumption did Ricardo make that
was appropriate to his time, but makes the application of the law to today's world much less
appropriate?
(e) Explain (or illustrate) the argument you indicated in (d).
More questions are on the back.
3.
(a) Briefly explain the roles of government according to Smith.
(b) State the harmony of interest doctrine. Provide an example that supports it, and one that,
according to most folks, refutes it.
(c) Why did feudalism break down?
(d) Why did mercantilism break down?
(e) How do some people argue in support of quotas or tariffs? Briefly explain four arguments
that were advanced in class.
Pledge:
An identical exam will be administered to students who take this exam who are entitled to a
make-up. Please take care when talking about the exam.
Please turn in this sheet with your exam.
Macroeconomic Final Exam
Name:
Please answer the questions in order.
Questions 1-7 together constitute 75 percent of the points.
1.
Graph a recessionary gap.
QUESTIONS 2-6 REFER TO THIS TYPE OF GAP.
2.
In Keynesian terms, list and explain two possible causes of the gap.
3.
Graph and explain the appropriate policy response according to the
Classical economists.
4.
Graph and explain the appropriate policy response according to the
Keynesians.
5.
Name and define the three tools of the Fed and explain how each is used
to diminish a recessionary gap.
6.
Based on Affluenza, critique the macroeconomic goal of increasing GDP.
7.
a. Define "consumer surplus."
b. Shade in the consumer surplus,
assuming that P3 is the price. (8)
8.
Assume the following:
Output per worker
Computers
Grain
Country A
1
3
Country B
2
5
In which good, if either, does country A have a comparative advantage?
Explain, and use numbers specific to this problem to make your case. (6)
9.
Of the three types of unemployment, which type(s) does Keynesian policy
NOT attempt to eliminate? (6)
10. The remaining five points will be based on the last Affluenza quiz.
Pledge:
Have a marvelous summer!
Macroeconomic study guide for final exam: At least 75 percent of your final
exam will come from this list. (The list may change as we go over the answers
together in class.)
1.
Name Smith's most famous book. When was it published? Explain the
concept of the "invisible hand."
2. Explain the law of comparative advantage and its implications. What are
the assumptions of the model?
3. Graph a recessionary gap.
4. In Keynesian terms, list and explain what may have caused it.
5. Explain the appropriate policy response according to the Classical
economists.
6. Explain the appropriate policy response according to the Keynesians.
7. If the size of the gap is $200 billion and the MPC is 0.9, how big a
change in autonomous spending is needed to eliminate the recessionary gap?
Show your work. (Other numbers may be substituted for these.)
8. Explain how the multiplier works.
9. Name and define the three tools of the Fed and explain how each is used to
diminish a recessionary gap.
10. Repeat questions 3, 4, 5, 6, and 8 for an inflationary gap.
11. Briefly explain four policies intended to promote long term economic
growth.
12. Based on Affluenza, critique the macroeconomic goal of increasing GDP.
Include chapter themes from Part I of the book.
The remainder of the exam will come from material that we have covered in
class over the course of the semester.
Figuring your needed final exam grade
(Lowest test grade) times (0.1) =
(Higher test grade) times (0.3) =
Targets:
A is 93; AB+ is 87; B
C+ is 77; C
D+ is 67; D
is
is
is
is
90;
83; B- is 80;
73; C- is 70;
63; D- is 60.
(Higher test grade) times (0.3) =
Sum of points already earned
=
Reminder: You need a C- to proceed to
Microeconomics.
_____ Your target
minus
_____ points already earned
equals
_____ *points you still need to earn*
so,
(needed final exam) times (.3) = *points you still need to earn*
and,
needed final exam = (*points you still need to earn*)/ 0.3
Macroeconomics/Northrop/Fall 2001/Third Exam
Name:
Please answer the questions in order, and be sure and answer all parts!
1. a.
b.
c.
d.
Graph a production that shows declining (but not negative) marginal product of capital.
What, if anything, is held constant?
Label a point on the graph that is representative of rich countries today.
What does this model predict for their future? (14)
2. a. Represent "new growth theory" with a graph.
b. Briefly explain the shape of the graph.
c. What does this model predict for the future of rich nations? (13)
3. List any two among Colander's policies to promote growth. (6)
4. a. Graph aggregate demand.
b. Fully explain its slope. (13)
5. Other than government policy, briefly explain one reason that aggregate demand may shift
to the left. (4)
6. What will happen to aggregate supply if productivity increases by 1 percent and wages
increase by 3 percent? (3)
7. According to Colander, what is one way that growth may be undesirable? (3)
8. a. Graph the price/output path.
b. According to this model, what determines the output level? (13)
9. Define (in words) the marginal propensity to consume. (3)
For two of the following four chapters from Affluenza, answer (a) and (b) below:
Resources
Dissatisfaction
An ounce of prevention
The road not taken
a. What is the main argument of the chapter?
b. List three specific, pertinent, and poignant points/facts/ideas that were used to support
the main argument. (14 for each chapter)
Macroeconomics/Northrop/Fall 2001/Second Exam
Name:
Please answer the questions in order, and be sure and answer all parts!
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
a. What is meant by "unlimited liability"?
b. Which form(s) of business organization has (have) unlimited liability? (5)
a. What is a "stock index"?
b. Name a stock index. (4)
Explain how a decline in stock values could cause a decline in real output. (4)
True or false?
a. The stock market boom of the 1990s was the largest in US history, dominating even that of the
1920s.
b. The big decline in the week after September 11 was the largest percentage decline in US
history, dominating even that of the Great Depression.
When did "macroeconomics" emerge as a separate subject within "economics"? (2)
a. What does it mean to be "unemployed"?
b. What is the mathematical expression for the unemployment rate?
c. According to Colander, what is one way that the official unemployment rate overstates actual
unemployment? Briefly explain.
d. According to Colander, what is one way that the official unemployment rate understates actual
unemployment? Briefly explain.
e. What is the numeric value of the "target" rate of unemployment?
f. On what basis has this target been criticized in recent years? (16)
**SHOW ALL YOUR WORK!** This includes writing out any formulas that you may use.
Assume the following:
Nominal GDP
Basket
Year
(in trillions)
price
1981
$4.0
$200
1982
$4.2
$210
1983
$5.0
$230
a. What is the real GDP for each year?
b. What is the inflation rate for 1983?
c. Did we actually produce more in 1982 than in 1981, and how do you know? (14)
a. In what units is nominal GDP measured? (Do not use "nominal" in your answer.)
b. In what units is real GDP measured? (Do not use "real" in your answer.) (4)
a. Is it possible for a price index to have a value of 97?
b. If no, why not? If yes, what information does "97" convey? (3)
In using the expenditure approach to measuring GDP, what all counts as "investment"? (6)
11. Affluenza: Pick two among the three chapters below. State the main argument of the chapter and
write a full paragraph indicating how the argument was made. (Please answer in order; 15 each.)
Bankruptcies
Congestion
"Dilated Pupils"
OVER
12.
Answer any three of the following questions from chapter 3:
a. Name the most important international organization that is "committed to getting countries to
agree not to impose new tariffs or other trade restrictions except under certain limited
conditions"?
b. Among our trading partners, which country purchases more of our goods than any other?
c. According to Colander, what is one way in which international trade differs from domestic
trade?
d. Japan, Germany, Britain, France, and the US get together to promote economic negotiations
and coordination among nations. What is the name of this group? (4)
13.
Answer any three of the following questions from chapter 7:
a. What is the largest component of national income for most countries?
b. Define "gross national product"?
c. How big is the underground economy in the US?
d. According to Colander, why are national income statistics not especially good for discussing the
income of developing countries? (4)
Write your pledge here:
Macroeconomics/Northrop/Fall 2001/First Exam



Name:
Please answer the questions in order.
Construct LARGE graphs, and fully label them.
Take care to answer all parts to each question.
4. (a) Graph the US demand and supply for steel that is produced in South Korea. Label your
demand curve "Dwith free trade" and label your supply curve "Swith free trade." Assume that the
international market works freely. Indicate the equilibrium values along the horizontal and
vertical axes of your graph.
(b) Redraw your graph from part (a) above. Now assume that a tariff of $100 per unit of
steel is placed on South Korean steel. Graph all the expected changes, and (if applicable)
the $100 tariff and the tax revenue.
(c) Assume again that there is free trade. Now graph the US demand and supply for steel
that is produced in the United States. Label your demand curve "Dwith free trade," and label your
supply curve "Swith free trade." Indicate the equilibrium values along the horizontal and vertical
axes of your graph.
(d) Redraw your graph from part (c) above. Now assume that a tariff of $100 per unit of steel
is placed on South Korean steel. Graph all the expected changes, and (if applicable) the
$100 tariff and the tax revenue. (30 pts. total)
5.
(a) Define "consumer surplus." (I am not looking for a description of how you find it on a
graph, but rather what it IS.)
(b) Define "producer surplus." (Again, I am not looking for a description of how you find it on
a graph, but rather what it IS.)
(c) Draw the supply and demand for pencils. Assume that the price exceeds the equilibrium
price. Clearly indicate the consumer surplus and the producer surplus.
(d) In what units are consumer surplus and producer surplus measured?
(20 pts. total)
6. Assume the following:
Output per worker
Computers
Grain
Country A
500
1500
Country B
1
2
(a) According to the model of comparative advantage, would trade be mutually beneficial?
If yes, what should each country export? Show your work.
If no, fully explain why not.
(b) Simply list the assumptions of the model of comparative advantage. (16 pts.)
7.
(a) Simply list the three questions that every economic system must answer, and with a
word, indicate for each how they were answered under feudalism, mercantilism, and in the
system that emerged after mercantilism.
(b) In what sense did "labor" not exist under feudalism?
(c) Discuss the enclosure movement and how it relates to (b).
(d) What was the goal of economic policy under mercantilism? List three specific policies
and briefly indicate how each advanced that goal. (34 pts.)
Answer ONE of the following bonus questions:
 Galbraith was critical of data compiled by whom?
OR
 In what year did the trend toward increased inequality begin?
OR
 Generally. increases in income are accompanied by decreases in income inequality. What
nations have been an exception to that generalization?
Pledge:
An identical exam will be administered to all students who take this exam, including those who
are entitled to a make-up. Please take care when talking about the exam.
Please turn in this sheet with your exam.