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Concordia University
ECON 203

Concordia UniversityDepartment of EconomicsECON 203INTRODUCTION TO MACROECONOMICSWinter 2010COMMON FINAL EXAMINATION VERSION 1 AND ANSWERSLAST NAME FIRST NAMESTUDENT NUMBER Please read all instructions carefully1This is a threehour exam 180 minutes The questions are worth 150 marks altogether It is a good strategy to spend one minute per mark for your answers 150 minutes and spend the remaining time 30 minutes to review your answers2The exam consists of four partsiPart I 25 multiplechoice questions 25 marksiiPart II Choose 5 out of 7 truefalse questions 25 marksiiiPart III Choose 4 out of 5 long questions 60 marks and ivPart IV One current events question 40 marks3Write your answers for the multiplechoice questions on the computer scansheet with a pencil For Parts II to IV write all your answers on this exam Do not use additional booklets4You are allowed to use a nonprogrammable calculator and a dictionary You may use either pen or pencil to provide your answers for Parts II to IVGradesPart I Part II Part IIIPart IV TotalPart I Multiple Choice Questions Write all answers on the computer sheet with a PENCIL Total25 marks1A saving deposit in a bank is consideredof that bankaA liabilitybAn assetcNet worthdCapitaleNone of the above2In the economy of Rosemont everyone is above the age of 15 In Rosemont 40 people have jobs 10 people are not working but are searching for work and 100 people do not work or seek work The unemployment rate isand working age population isa15 percent140b14 percent150c25 percent140d20 percent150eNone of the above3An example of investment in computing real GDP using the expenditure approach is the purchase ofaA new cooking oven by Tim Hortons to bake donutsb100 shares of Air CanadacBatteries by Ford company to put in their carsdA 100year old house by a married coupleeBoth a and c are correct4Empirical evidence for Canada suggests that if actual GDP grows by 2 percent a year and potential GDP grows by 3 percent a year then aThe unemployment rate will be unchangedbThe unemployment rate will fall by 1 percentage pointcThe unemployment rate will rise byof one percentage pointdThe economy will experience an inflationary gapeNone of the above5If a 100 billion increase in investment spending creates 100 billion of new income in the first round of the multiplier process and 50 billion in the second round the multiplier in the economy isa25b5 c133d2eCannot be determined6Changes in which of the following will affect the size of the multiplierI Marginal propensity to importII Marginal propensity to saveIII Lumpsum taxesa I only b II only c III onlyd I and III only e I II and III 7For a given fluctuation in autonomous expenditure economies with flatter AE functions willaExperience smaller business cycle fluctuations in real GDP and employmentbExperience the same business cycle fluctuations in real GDP and employmentcExperience larger business cycle fluctuations in real GDP and employmentdExperience stable real GDP and employment with no business cycle fluctuationseNone of the above8The New Democratic Party NDP wants the Progressive Conservative government to spend more money on building lowincome housing If the NDP wants the spending to have maximum effect on economic growth which of the following saving equations would it prefer to seeaS80054YTbS150075YTcS 90041YTdS 100092YTeS 10067YT2
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