Introduction to Macroeconomics

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It is an assignment for an introductory macroeconomics course. Please get back to me with any questions that you might have. Thanks.

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Questions 1-4 Gamma’s 2018 National Accounts 1. Net Domestic Product 2. Exports 3. Personal income taxes 4. Government expenditures 5. Consumption expenditures 6. Net investment 7. Imports 8. Corporate profits before taxes 9. Personal disposable Income 10. Depreciation 1. Gamma’s GDP in 2018 was a) $950 billion b) $1,050 c) $1,100 d) $1,200. 2. Gamma’s (gross) investment in 2018 was a) $75 billion b) $85 c) $90 d) $175. 3. Gamma’s personal income in 2018 was a) $1,445 b) $1,650 c) $1,750 d) $1,870. 4. Gamma’s personal savings in 2018 were a) $200 b) $650 c) $700 d) $850. White Assignment Winter 2019 ECO 1102G Billions of $ 1,120 60 150 300 800 300 70 250 1,500 80 Introduction to macroeconomics Page 2 of 8 Questions 5-9 Actual GDP ($ Billions) Actual GDP growth rate (%) Real GDP ($ Billions) Real GDP growth rate (%) GDP Price Deflator Rate of inflation (%) 2015 A=? 2016 590.4 B=? 560 102 2% 103.3 C=? 2017 4 582.6 2% D=? 5. Actual GDP in cell A (1st decimal; no rounding) is a) $533.4 b) $556.3 c) $571.2 d) $587.3 6. Actual GDP rate of growth in cell B (1st decimal; no rounding) is a) 2.7% b) 2.9% c) 3.0% d) 3.3% 7. The rate of inflation in year 2016 (cell C; 1st decimal; no rounding) is a) 0.8% b) 1.0% c) 1.2% d) 1.4% 8. The GDP deflator in year 2017 (cell D; 1st decimal; no rounding) is a) 103.3 b) 105.3 c) 105.7 d) 106.4 9. Actual GDP in year 2018 (cell E; 1st decimal; no rounding) is a) $614.0 b) $642.8 c) $651.8 d) $653.6. White Assignment Winter 2019 ECO 1102G 2018 E=? 593.0 108.4 Introduction to macroeconomics Page 3 of 8 Questions 10-12 Freeland’s Calendar Year 2018 Population and Labour Force Statistics Total population Population 14 years and under Unemployment Working-age population not in the labour force Labour force (Delete Row) 55,000,000 20,000,000 2,000,000 6,000,000 24,000,000 10. Freeland’s total employment in 2018 was a) 20 million b) 22 million c) 27 million d) 39 million 11. Freeland’s unemployment rate in 2018 (first decimal; no rounding) was a) 5.4% b) 6.5% c) 6.8% d) 7.2%. 12. Freeland’s working-age population in 2018 was a) 6,000,000 b) 20,000,000 c) 27,000,000 d) 35,000,000 13. Freeland’s employment-to-working age population rate (first decimal; no rounding) in 2018 was a) 70.0% b) 77.1% c) 79.2% d) 81.2%. 14. Freeland’s labour force-to-working age population rate (first decimal; no rounding) in 2018 was a) 75.0% b) 77.1% c) 79.2% d) 82.2%. 15. Using an AD/AS model, what would happen to the price level and output in Canada in the short-run as a major ice storm stops production at Ontario’s at major car manufacturing plants in Ontario. Assume that the economy starts in a long- and short-run equilibrium. a) Both price and output would increase. White Assignment Winter 2019 ECO 1102G Introduction to macroeconomics Page 4 of 8 b) Both price and output would decrease. c) Price would increase and output would decrease. d) Price would decrease and output would increase. 16. Using an AD/AS model, what would happen to the price level and output in Canada in the short-run as the planet’s GDP growth rate falters. Assume that the economy starts in long- and short-run equilibrium. a) Both price and output would increase. b) Both price and output would decrease. c) Price would increase and output would decrease. d) Price would decrease and output would increase 17. Using an AD/AS model, what would happen to the price level and output in Canada in the short-run as Canadians have increased confidence in the future of their economy. Assume that the economy starts in long- and short- run equilibrium. a) Both price and output would increase. b) Both price and output would decrease. c) Price would increase and output would decrease. d) Price would decrease and output would increase. 18. If the price of a Big Mac were 3.20 dollars in Canada and 15 Yuan in China, what would be the implied (based on Big Mac prices in both countries ) exchange rate of the Chinese Yuan to the Canadian dollar? a) 4.68 Yuan per CDN dollar b) 3.701 c) 0.21 19. If the price of a Big Mac were 3.20 dollars in Canada and 15 Yuan in China when the actual exchange rate was 5 Yuan per $CDN, the Canadian dollar would be a) Overvalued. b) Undervalued. c) Need more information. White Assignment Winter 2019 ECO 1102G Introduction to macroeconomics Page 5 of 8 The following Table shows the aggregate demand (AD) and the short-run aggregate supply schedules for Freeland’s economy. YAD is the level of real GDP along the AD curve for a given price level while YSRAS is the level of real GDP along the SRAS curve for a given price level. Questions 20-22 Price Level YAD YSRAS 90 100 110 120 130 140 150 1400 1300 1200 1100 1000 900 800 950 1000 1050 1100 1150 1200 1250 20. What are Freeland’s price level and real GDP in a short-run macroeconomic equilibrium? a) 100; 1300 b) 120; 1100 c) 140; 900 d) 150; 1250 21. If Freeland’s potential GDP was $1200, the economy would be experiencing a) an inflationary gap b) a budgetary deficit c) a recessionary gap d) a money supply gap 22. Which fiscal or monetary policies would be required to bridge Freeland’s real GDP gap? a) lower government expenditures. b) increased money supply. c) higher taxes. d) decreased money supply. Questions 23-26 Shady Bank’s Balance Sheet on January 1, 2018 Assets Liabilities + Net Worth 1. Deposits at the Bank of Canada = 90 2. Cash = 170 3. Government Bonds = 260 4. Loans = 200 1. Deposits = 5,000 $ Desired reserve coefficient = 5% White Assignment Winter 2019 ECO 1102G Introduction to macroeconomics Page 6 of 8 23. Shady Bank’s total reserves on January 1, 2018 were a) $90 b) $170 c) $260 d) $5,000 24. How much new money could Shady Bank (only Shady Bank) create? a) $0 b) $10 c) $30 d) $90 25. The money multiplier (all banks) was a) 5 b) 10 c) 15 d) 20 26. How much money could the entire banking system (Shady Bank and its competitors) create? a) $100 b) $200 c) $300 d) $500. 27. Assume that the central bank (i.e., the Bank of Canada) purchases $5,000 of federal government bonds from Maximum Bank. Bond purchases from Maximum Bank will cause Bank of Canada assets to a) increase by $5000 b) decrease by $5000 c) to remain unchanged. Questions 28-30 1. Assume that investment expenditures (I) increase by a multiple of 10 dollars for each 1 percentage point decrease in Sunland’s rate of interest (i). 2. Sunland’s simple (no inflation) GDP multiplier is 20. 3. Sunland’s money multiplier (no currency drainage) is 5. 4. When Sunland’s money supply changes by $20, the rate of interest (i) changes by 1 percentage point. 28. What change in investment expenditures (I) is required to bridge Sunland’s current recessionary gap of $400? a) an increase of $20 b) a decrease of $20 White Assignment Winter 2019 ECO 1102G Introduction to macroeconomics Page 7 of 8 c) an increase of $40 d) a decrease of $40. 29. What change in the rate of interest (i) is required to generate the change in investment expenditures in question 28? a) an increase of 2 percentage points b) a decrease of 2 percentage points c) an increase of 4 percentage points d) a decrease of 4 percentage points. 30. What change in the money supply is required to generate the change in the rate of interest in question 28? a) an increase of $10 b) a decrease of $10 c) an increase of $40 d) a decrease of $40. o-o-o White Assignment Winter 2019 ECO 1102G Introduction to macroeconomics Page 8 of 8 ...
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