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ECO 407 first 3 quizzes

by: Jonas Ofori

ECO 407 first 3 quizzes ECO 407

Marketplace > University at Buffalo > Economics > ECO 407 > ECO 407 first 3 quizzes
Jonas Ofori

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About this Document

Part of the final cumulative quiz will consist of these quiz. It is up to date with the class.
Intermediate Macroeconomics
Prof. James Holmes
Study Guide
Economics, Math, Data Analysis
50 ?




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This 9 page Study Guide was uploaded by Jonas Ofori on Monday September 19, 2016. The Study Guide belongs to ECO 407 at University at Buffalo taught by Prof. James Holmes in Fall 2016. Since its upload, it has received 15 views. For similar materials see Intermediate Macroeconomics in Economics at University at Buffalo.


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Date Created: 09/19/16
Name____________________________ID #________________are you making up an I? Quiz 1 Economics 407 Fall, 2016  Chapters 1­2 Professor James Holmes 2 From syllabus: 1) At what point will a take home quiz be considered late and you can only get ½ credit for  your correct answers? 2) If you earn the grade of Incomplete in this course, then how do you make it up?  Do you reregister? From text and lectures: 3) A) Macroeconomists focused on three (kinds of) economic variables.  Name at least two of them. B) Give two examples of non­human capital. 4) A) Explain what stagflation means. B) what does opportunity costs mean?  Explain using a paradigm. 5) In a hypothetical small, closed economy, compute GDP.  There are two kinds of firms logging sawmill firms and furniture firms.  The sawmill firms sell $6400 of their product to the furniture  firms and pay their employees $3600 and earn a profit of $2800 in a year.  The furniture firms  sell their output for $12000 and pay their workers $3200 and earn a profit of $2400 in the same  year. What is this economy’s GDP for this year? SHOW YOUR CALCLATIONS!!! 7) Using the rule of 72, approximately how many years will it take to double an investment if it  earns at the rate of 6% per year compounded yearly? 7)  What are the two macroeconomic policies the United States government can use that could  prevent a  recession or may hasten a recovery? 3 8) Why do economists believe that the US may be entering a ”NEW” economy,  characterized by higher productivity and low inflation? Question 9 is based on the following data: 2013 2014 Object Quantity Price Quantity Price Potatoes 4000 $8 6000 $10 Beans 800 $10 1600 $6 SHOW YOUR CALCULATIONS!! 9)  A) What is the nominal GDP for each year? B) Using 2013 as a base year, what is the real GDP in 2014? 10)  Explain (and use the formula for GDP that involves exports and imports) how it is possible  for a country’s exports to be greater than its GDP. Bonus;  11) A)What is the difference in the kinds of goods included in the GDP deflator and in the CPI? B) Give one example of a specific good or service included in each that is not included in the  other. 1. 2. Name_______________________________ Quiz 2 Economics 407 Fall, 2016 Chapters 3 Professor James Holmes 2 Lecture; 1) A. Explain what is causality using a paradigm of a Causal theory? B. Give a paradigm of a non­causal theory. 2)  A) What were two important economic effects of the hyperinflation in Germany from 1919­ 1929 according to Prof. Holmes?  B) What arguably was the consequences of the hyperinflation upon German society and politics?   (I.e. why should we be concerned with inflation?) 3)  A) Describe at least two of the economic effects the Great Depression had on the American  Economy.  B) What was at least one non­economic (social/political) effect of the Great Depression? 4)  A. What are two properties distinguish a scientific from a non­scientific theory? B. Relate the concept of “replication” to accepting or rejecting a scientific theory and the concepts  of a function and a non­function. 5)  Prof. Holmes stated that macroeconomics was difficult because it involved 3 things.  Explain  what these are; Textbook: 6) A.  Relate an exogenous and an endogenous variable to causality.  B. What 3 kinds of investment are included in GDP? 7) A. Give the equation for GDP  B. Define each variable used. 3 Use the following data for questions 9­10.  For each give the algebraic equation that you employ:  SHOW YOUR WORK 2. Economists have calculated the following values for some country A. Economic Variables Billions of Dollars Consumption expenditures 3000 Transfer payments 1200 Total tax revenue (including SS and med. tax  1400 rev.) Nonresidential Investment 160 Residential Investment 140 Inventory Investment 100 Government Spending on goods and services 600 Imports 320 Exports 700 8) A) Calculate the value of private saving?   Show formula you use.     B) Calculate the value of total demand for final goods (equal total income) measured by GDP in  Country A?  Show formula you use. 9)  A) Calculate the value of Country A’s Net Exports?   Show formula you use.    Does this represent a trade surplus or a trade deficit? B)  Is Country A running a balanced budget, budget deficit, or budget surplus?  How much? C) How is inflation measured? 10) Explain how a countries exports can exceed its GDP? Bonus; WSJ ((9/9/16) Edmund Phelps in “Hard Truths About Easy Money”, argued that this  policy affected the unemployment rate and the participation rate. Explain what these terms mean. A) Unemployment rate; B) Participation Rate; Quiz 3 Name ______________      If you’re making up an incomplete, what is your student ID? _____________ Economics 407 Fall, 2016 Professor James Holmes 2 1) WSJ (9/15/16) Richard Epsteinin “The necessity of the Rich” argued that A) the large inequity in  income in the US was caused by what? B) He criticized the popular measures of income inequality, because it excluded What? 2) Explain and give a hypothetical numerical example of the difference between your: A) Wealth and disposable Income,  B) Saving and Consumption. C) Use a Paradigm to distinguish between a Prima Facie and a Spurious cause. 3) A) How does the central bank contract the money supply? B) Explain the concept of satiety, using a personal example. C) Explain how historical time is different from abstract time. 4, 5) A bank has $14,000 in bonds, $4,000 in reserves, $40,000 in loans, and $56,000 in checkable  deposits. The legal required reserve ratio is RR/deposits = 10%. A) What is the net worth or capital of the bank? B) What is the total reserve ratio for the bank and does it meet its legal requirement? C) Explain what action this bank can take to, and why they would want to, reduce the probability of a  "bank run"? D) What happens to this bank if $10,000 of its $40,000 in loans defaults? E) Will holding more reserves protect it from the danger in (D) if $10,000 of its loans default? 6) Sue has $1,000 in cash, $1,400 in her checking account, credit card debt of $1,000, $30,000 in stocks  and $10,000 in bonds.  A) How much money would a macroeconomist say Sue has?  B) What is her net  worth?  C) How would your answers to A) and B) change if she had $44,000 in additional consumer/  credit card loans?  Show your calculations.  A)                                                  B) C) 3 7) Assume you can earn on a safe investment, e.g. a CD, 6 1/2% per year.  You're going to purchase a car which cost $22,500.  You're given the option to pay for it either by paying A. $22,500 now, or B. $4,500now, and then a second payment of $9,000 in one year, followed by a third payment of $12,000 in two years. Which option has a lower present value and therefore a lower opportunity cost for you? SHOW your  calculations. 8) A) What makes up the quantity of money held by the public? B)  What is high powered or central bank money and how is it measured?   C)  What is the theoretical relationship between the quantity of money supplied and the (short­term)  interest rate? 9) A) Explain 3 major variables or factors that influences our decision to hold either more money or more bonds? B) Explain what a financial intermediary does and give two examples. 10)  A) Portray the demand for money (liquidity preference) and the supply of money in the graph below. Portray the initial equilibrium with the subscript zero for the relevant shift variables. b) What are the causal and the explain variables in  )                                                                                                this theory? a t r t I   Money (M)


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