Review3Apr12.pdf

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Department
Management and Organizational Studies
Course
Management and Organizational Studies 2275A/B
Professor
Henry Meredith
Semester
Winter

Description
THE UNIVERSITY OF WESTERN ONTARIO LONDON CANADA Economics 1022B - 002/004 J. Gillmore Re view 3 April, 2012 1) Suppose the price of a burger is $4.50 Canadian in Toronto, and the exch ange rate is 67 U.S. cents per Canadian dollar. Then A) the price of a burger is $3 U.S. in New York if purchasing power parity holds. B) the Canadian dollar is expected to depreciate according to purchasing po wer parity. C) the price of a burger is $3 U.S. in New York if interest rate parity hol ds. D) the price of a burger is $4.50 U.S. in New York if purchasing power pari ty holds. E) the Canadian dollar is expected to appreciate according to purchasing po wer parity. Use the information below to answer the following question. Fact 1 You are given the following information about the country of Ecoland, wh ose currency is the turkey, and whose official settlements balance is zero. Variable Billions of turkies Real GDP 50 Consumption expenditure 30 Government expenditure on goods and services 12 Investment 11 Exports 10 Government budget deficit 2 2) Refer to Fact 1. What is the value of the private sector deficit or surp lus? A) zero B) +1 billion turkies C) -3 billion turkies D) -2 billion turkies E) -1 billion turkies 3) Which one, if any, of the following events shift the short-run aggregate supply curve but not the long-run aggregate supply curve? A) A change in the quantity of capital. B) An advance in technology. C) An increase in the full-employment quantity of labour. D) A change in factor prices. E) None of the above. 1 Use the table below to answer the following question. Table 1 Price Aggregate Short-Run Long-Run Level Demand Aggregate Supply Aggregate Supply (2002=100) (billions of 2002 dollars) (billions of 2002 dollars) (billions of 2002 dollars) 100 800 300 600 110 700 400 600 120 600 500 600 130 500 600 600 140 400 700 600 4) Refer to Table 1. Consider the economy represented in the table. The economy is in A) a long-run equilibrium, and resource prices will not change. B) an above full-employment equilibrium, and factor prices will increase. C) a below full-employment equilibrium, and factor prices will increase. D) an above full-employment equilibrium, and factor prices will decrease. E) a below full-employment equilibrium, and factor prices will decrease. Use the table below to answer the following question. Table 2 Disposable Consumption Income Expenditure (dollars) (dollars) 325 325 400 375 475 425 550 475 625 525 5) Refer to Table 2. What is the value of the marginal propensity to consume? A) 1.33 B) 0.75 C) 0.67 D) 0.34 E) 0.25 2 Use the table below to answer the following question. Table 3 The following table shows the relationship between aggregate planned expenditure and GDP in the hypothetical economy of Econoworld. Real GDP Aggregate planned (billions of 2002 expenditure dollars) (billions of 2002 dolla
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