UCI Economics Exam Practice

Description

1 attachmentsSlide 1 of 1attachment_1attachment_1.slider-slide > img { width: 100%; display: block; }
.slider-slide > img:focus { margin: auto; }

Unformatted Attachment Preview

Final Exam Review Questions
1.
GDP 1999 = 5 trillion
GDP 2009 = 10 trillion
A) Find avg annual growth rate.
B) What are the 3 reasons that cause a country to grow? Explain why they cause
growth.
C) For each of the 3 reasons listed in B, give a policy the government could
implement to try to increase/incentivize the sources of growth.
2. GDP=20 Consumption=13
Public Saving= -2
Taxes=8
Transfer Pmts=4
A) Calculate Private Saving, Government Spending, Investment and National Saving
B) Is the Govt budget currently in surplus, deficit or balanced?
C) Explain the role of Savings/Investment to long run growth.
D) How is the Govt budget impacting the level of Investment?
3. The Fed decides to buy $50 million in bonds.
A) Show the initial T-account at the bank when this gets deposited.
B) If the Reserve Requirement is 25%, show the T-account after the first loan is
made.
C) What is the maximum amount the money supply could expand by from this
purchase. Show the T-account if the maximum number of loans and deposits is
made.
D) Show the affect of the change in the Money Market (your numbers don’t have to
be precise, just show the change to the equilibrium.)
E) Assume this purchase ultimately increased the overall money supply by 5%, if the
growth rate of GDP was 2%, calculate the expected change to inflation in the long
run.
F) What are the other two ways the FED could have increased the money supply?
*One more question on the next page
4. The FED is predicting that next year higher AD could cause GDP to rise to $12
Trillion with an unemployment rate of 4%, even though it is estimating that
Potential GDP = $11 Trillion and the natural rate of unemployment is 6%.
A) Draw an AS/AD depicting the current prediction from the FED and where the
economy would be if GDP =$12 Trillion (You should include AD, SRAS and LRAS,
make sure you correctly label the axes as well). Label that point “A.”
B) If the FED decides to not use policy, where would the economy eventually end
up? Label that point “B” and indicate what happens to GDP, UE and P. Explain how
the economy moves from A to B.
C) If the FED instead decides to enact Monetary Policy (starting at A), indicate the
steps that they would take. Show where the economy would end up on your graph
and label that point “C.” Explain the steps that cause the economy to change and
indicate what happens to GDP, UE and P as you move from point A to C.
D) Is the policy the FED chose in C expansionary or contractionary. What “goal” is
the FED trying to achieve with its policy?
E) If the Government instead tried to enact fiscal policy (starting at A), indicate the
steps they would take. Show where the economy would end up on your graph and
label that point “D.” Explain the steps that cause the economy to change and indicate
what happens to GDP, UE and P as you move from A to D.
F) What additional goal can the Govt achieve by enacting fiscal policy in this case?
(hint…think about the govt budget)

Purchase answer to see full
attachment

Explanation & Answer:
200 words

Tags:
economics

technological innovations

annual growth rate

User generated content is uploaded by users for the purposes of learning and should be used following FENTYESSAYS.COM ESSAY’s honor code & terms of service.