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# ECON 1010 Study Guide - Final Guide: Money Supply, Real Interest Rate, Reserve RequirementExam

Department
Economics
Course Code
ECON 1010
Professor
All
Study Guide
Final

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PRINCIPLES OF MACROECONOMICS
FINAL EXAM: SAMPLE #2
Duration - 3 hours
Aids Allowed: Non-programmable calculators only
THERE ARE 100 MARKS IN THIS EXAM. THERE ARE TWO PARTS
Part I Ten macroeconomic questions of which you are expected to answer any eight
(10 marks each for a total of 80)
If you answer more than eight questions without clearly indicating the eight
you wish marked, the eight lowest marks will count as your eight.
Part II 10 multiple choice questions worth 2 marks each for a total of 20. Wrong
All questions are to be answered in the spaces provided in this question paper booklet
Do not remove any pages or add any pages. No additional paper will be supplied.
The blank backs of pages may be used for rough work. Show your work where applicable.
PRINT YOUR NAME AND STUDENT CLEARLY BELOW
Student Name: ______________________________________________________
(Family Name) (Given Name)
Student Number: ______________________________
PUT YOUR NAME AT THE TOP OF EACH PAGE.
THERE ARE 13 PAGES TO THE EXAM
Marks Awarded
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MC

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Principles of Macroeconomics: Final Exam, Sample #2 Answers
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PART I : Answer only 8 of the 10 questions
1. Prices Indices (10 marks)
1997
2000
Price/unit
Quantity
Price/unit
Quantity
Rice (kilo)
\$1.50
60
\$2.50
40
Potatoes (kilo)
\$2.00
30
\$1.20
50
The above table gives data for the price/unit and quantity of Rice and Potatoes
consumed by the average student in 1997 and 2000. Assuming that 1997 is the base
year, calculate the following values.
a) nominal student consumption in 2000 (1 mark)
1 mark: correct setup (formula or numbers): 2.50*40 + 1.20*50= \$160
b) the consumer price index for 2000 (3 marks)
1 mark: correct numerator (2.5*60 + 1.2*30) = 186
1 mark: correct denominator = 1.5*60 + 2 * 30 = 150
1 mark: correct answer = 100*186/150 = 124
c) real consumption in 2000 relative to 1997 according to the consumer price index
(1 marks)
1 mark: right answer (or consistent with a) and b)) = \$160/124 =\$129
d) the total inflation between 1997 and 2000 relative to 1997 (1 mark)
1 mark: (124 –100)/100 = 24 % (or consistent with b)
e) real consumption in 2000 according to the GDP deflator measure using CPI (1 mark)
1 mark: = 160 from 1.5*40 + 2 * 50 [or could also divide Nom by deflator]
f) the GDP deflator for 2000 given 1997 as the base year (3 marks)
1 mark: correct numerator = 2.5*40 + 1.2*50
1 mark: correct denominator = 1.5*40 + 2 * 50
1 mark: correct answer = 100*160/160 = 100

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Principles of Macroeconomics: Final Exam, Sample #2 Answers
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2. National Accounts (10 marks)
The following data are from the National Accounts of Canada for 1980 (\$Billions)
Corporate Profits (before Taxes)
65,000
Interest and Miscellaneous Investment Income
45,000
Gross Investment
120,000
Net Investment Income of Non-Residents
20,000
Government Spending
130,000
Wages and Salaries and Supplementary Labour Income
330,000
Government Transfer Payments
55,000
Depreciation (Capital Consumption Allowances)
70,000
Exports
160,000
Net Income of Unincorporated Businesses (Farm and non-Farm)
30,000
Imports
155,000
Consumption
350,000
Corporate Taxes
20,000
Personal Taxes
25,000
Indirect Taxes Less Subsidies
60,000
Retained Earnings (Undistributed Corporate Profits)
30,000
Rent (Rental Income)
5,000
a) Net Domestic Income calculated from Factor Incomes (2 marks)
1 mark: correct except for one mistake
1 mark: correct answer: = 330 + 65 + 30 + 5 + 45 = 475,000 (must do it this way not as below)
b) Gross Domestic Product from Net Domestic Income (1 mark)
1 mark: = 475 + 70 + 60 = 605,000
c) Gross Domestic Product from Aggregate Expenditure (1 mark)
1 mark: missing only one number
1 mark: 605,000 = from 350 + 120 + 130 + 160 – 155 (must be correct since same as b)
d) Personal Income (1 mark)
1 mark: 475 – 20 – 30 + 55 = 480,000 (must be correct)
e) Personal Savings (1 mark)
1 mark: = 480,000 – 25,000 – 350,000 = 105,000 (or consistent with their mistake in d))
f) Net Domestic Product (1 mark)
1 mark: = 475 + 60 = 535,000 (or 605 – 70)
g) Gross National Product (1 mark)
1 mark: = 605 - 20 = 585,000 (must be correct)
h) Dividends
1 mark: = 15,000 from 65,000 – 30,000 – 20,000