# ECON 1010 Study Guide - Final Guide: Canadian Dollar, Excess Reserves, Reserve RequirementExam

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Principles of Macroeconomics

Final Exam: Sample #3

Duration - 3 hours

Aids Allowed: Non-programmable calculators only

INSTRUCTIONS:

This examination consists of TWO PARTS

Part I 10 diagrammatic/calculation questions of which you are expected to

ANSWER ANY 8 (10 marks each for a total of 80%)

Part II 10 multiple choice questions of which you are expected to answer ALL 10.

(2 marks each for a total of 20%).

Wrong answers will not be deducted from right in grading Part II.

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 number clearly on the front of the exam and on any loose pages.

Student Name: ______________________________________________________

(Family Name) (Given Name)

Student Number: ______________________________

There are 14 pages to the exam.

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Principles of Macroeconomics: Final Exam, Sample #3

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PART I: ANSWER ONLY 8 OF 10 QUESTIONS

Place your answers (and work where necessary) in the space provided.

1. National Accounts (10 marks)

The following data are from the National Accounts of Canada for 1980 ($Billions)

Indirect Taxes Less Subsidies

60,000

Retained Earnings (Undistributed Corporate Profits)

30,000

Net Income of Unincorporated Businesses (Farm and non-Farm)

30,000

Net Investment Income of Non-Residents

20,000

Government Spending

130,000

Government Transfer Payments

55,000

Depreciation (Capital Consumption Allowances)

70,000

Exports

160,000

Consumption

350,000

Personal Taxes

25,000

Imports

155,000

Corporate Profits (before Taxes)

65,000

Corporate Taxes

20,000

Wages and Salaries and Supplementary Labour Income

330,000

Interest and Miscellaneous Investment Income

45,000

Gross Investment

120,000

Rent (Rental Income)

5,000

Calculate (Show your work)

a) Net Domestic Income from Factor Cost (2 marks)

1 mark: correct numbers except for one mistake

1 mark: correct answer: = 330 + 65 + 30 + 5 + 45 = 475,000

(Many will miss the 5 for Rent and get 470,000. Give only one mark here)

b) Gross Domestic Product from Net Domestic Income (2 marks)

1 mark: NDP (475) plus one of CCA (70) or Indirect Taxes (60)

1 mark: = 475 + 70 + 60 = 605,000

(Give marks for consistency but take one mark off here before doing so. For example, those who

got 470,000 for a) and have 600,000 here should get 1 mark only here)

c) Gross Domestic Product (2 marks)

1 mark: one missing piece

1 mark: correct answer: 350 + 120 + 130 + 160 – 155) = 605,000

(Give full marks if consistent with mistaken b)

d) Personal Income (2 marks)

1 mark: missing one item

1 marks: 475 – 20 – 30 + 55 = 480,000 (no consistency marks)

(Give full marks if consistent with mistaken a)

e) Gross National Product (1 mark)

1 mark: 605 – 20 = 585,000 (no consistency marks)

(Give full marks if consistent with mistaken b)

f) Government Budget Surplus(+)/Deficit(-) (1 mark)

1 mark: = -80 from 60 + 25 + 20 – 130 - 55

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Principles of Macroeconomics: Final Exam, Sample #3

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2. Prices Indices (10 marks)

2002

2007

Price/unit

Quantity

Price/unit

Quantity

Apples (per apple)

$0.75

30

$0.50

40

Milk (per litre)

$0.80

35

$1.10

25

The above table gives data for the price/unit ($)and quantity of Apples and Milk consumed

per month on average by the typical Canadian student in 2002 and 2007. Assuming that

2002 is the base year, calculate the following values.

a) Nominal family consumption in 2007 (1 mark)

1 mark: = $47.50 from $0.50*40 + $1.10*25

b) The consumer price index for 2007 to two decimals (3 marks)

1 mark: correct numerator of 100*(0.50*30 + $1.10*35)/($0.75*30 + $0.80*35)

1 mark: correct denominator of 100*(0.50*30 + $1.10*35)/($0.75*30 + $0.80*35)

1 mark: = 105.94 (accept something close if setup is correct)

c) Real consumption in 2007 relative to 2002 according to the consumer price index (to one

decimal) (1 mark)

1 mark: = $44.8 from something like 100*$47.50/105.94

d) Total inflation (%) between 2002 and 2007 relative to 2002 (to two decimals) (1 mark)

1 mark: = 5.94% (or consistent with their answer in b)

e) Real consumption in 2007 according to the GDP deflator measure (to one decimal) (1 mark)

1 mark: = $50 from $0.75*40 + $0.80*25

f) The GDP deflator for 2007 given 2002 as the base year to one decimal (2 marks)

1 mark: correct numerator and denominator = 100*($0.50*40+$1.10*25)/($0.75*40+$0.80*25)

1 mark: correct answer = 95

g) Ignore the previous information. Suppose that the GDP deflator for Canada was 100 in 1997

(base year), 106 in 2001, and 117 in 2008. What was the total amount of inflation (percent)

between 2001 and 2008 to two decimals? (1 mark)

1 mark: = 10.38% from 100% * (117 – 106)/106

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