ECON 104 Final exam

# ECON 104 Final exam

1. Fill in the table below. The current wage is \$200 and the price of output (Q) is \$30. Each box is worth V2 of a point. Enter whole numbers only (no commas, no decimals, no dollar signs) and if a value is negative, be sure to enter the negative sign.LQMPLMRPMarginal ProfitTotal Profit000172153224285336372.Use the table from question 1 to complete the next six questions. Enter the correct values in the boxes below. Enter only whole numbers (no commas, no decimals, no dollar signs). Each fill-in-the-blank below is worth 3 pointsThis profit maximizing firm will hire workers.3.This profit maximizing firm will produce units of output.4. This firms maximum profit equals 5. Now suppose that the wage falls to \$170. You will need to recalculate the values from the table, given this new wage, to answer the questions below.This profit maximizing firm will now hire workers.6. This profit maximizing firm will now produce units of output.7. This firms maximum profit now equals 8. Use the following information to answer the next nine questions. Each fill-in-the-blank is worth 3 points.If your answer is in decimal form, enter it with 2 decimal places. For example, if your answer is .4, enter it into the fill-in-the-blank as .40, or if your answer is 1.4, enter it into the fill-in-the-blank as 1.40. If there are no decimals in your answer, you will simply enter the number; so if your answer is 2, enter 2 with no decimals. Do not use commas.Suppose the economy is characterized as follows:AE = ?? + I + G + (X-M) ?? = 400 + .75(Y T) 30 (r)I = 500 50(r)G = 400X- M = -25 T = 80r = 5Price level P is fixed at 1 (P=1)Use the information above to get expressions for the consumption function and the AE equation.The vertical intercept for the consumption function is 9. The slope of the consumption function is 10 . The vertical intercept of the AE equation is 11. The slope of the AE equation is 12.Equilibrium output is equal to 13.Equilibrium consumption is equal to 14. Suppose the Consumption function changes to C=500 +.75(Y-T) 30(r).The new value of equilibrium output is 15 . The new value of equilibrium consumption is 16. The Consumption function is still C=500 +.75(Y-T) 30(r). The Keynesian spending multiplier in this economy is17. Use the following information to answer the next four questions. Each multiple choice question is worth 3 points.mm = money multiplier = .8MB = monetary base = 3000Money Demand: Md= P X [ a0+ .5 (Y) 200 (i) ]where: a0= 1000. Y = 3600For simplicity we hold the price level fixed at 1 and assume that inflationary expectations are fixed at 2%. Y is also held constant in this problem.What is the equilibrium interest rate (i)?A) 1% B) 2% ??) 2.5% D) 3%E) None of the above are correct18.Suppose ao falls to 800. What is the new equilibrium interest rate?A) 1% B) 2% ??) 2.5% D) 3%E) None of the above are correct19.Suppose that the Fed wanted to keep interest rates constant at their initial level (the value you found in #1). What would the Fed have to do in terms of open market operations to achieve this?A) 200 in open market sales U ??) 200 in open market purchases??) 250 in open market sales D) 250 in open market purchases E) 2200 in open market sales20. Given the interest rate you found in #18. what is the ex-ante real interest rate?A)-1% B) 0%??) 1%D) 2%E) None of the above are correct

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