Macro Economics Questionnaire

ECON3301- Winter 2022
SMU – SSB
Intermediate Macroeconomics –Assignment 1, Answer Key
Professor: Dr. Maryam Dilmaghani
Question 1.
Using Table 1, fill in the blanks of Table 2. Show your work.
Table 1.
Year 2018
Year 2019
Good
Quantity (Q)
Price (P)
Quantity (Q)
Price (P)
Apple
2,000
$20
2,500
$25
Wheat
1,000
$10
3,000
$10
20
$20,000
20
$15,000
Car
Table 2.
Year
Nominal GDP
RGDP; Base Year=2018
RGDP; Base Year=2019
2018
450,000
450,000
360,000
2019
392,500
480,000
392,500
Nominal GDP (2018) =RGDP 2018 (Base Year: 2018) = 2,000*$20+1,000*$10+20*$20,000=$450,000
Nominal GDP (2019) = RGDP 2019 (Base Year: 2019) = 2,500*$25+3,000*$10+20*$15,000=$392,500
RGDP 2018 (Base Year: 2019) = 2,000*$25+1,000*$10+20*$15,000=$360,000
RGDP 2019 (Base Year: 2018) = 2,500*$20+3,000*$10+20*$20,000=$480,000
Page 1 of 4
ECON3301- Winter 2022
SMU – SSB
Question 2.
Using the previous question, fill in the blanks of Table 3. Show your work.
Table 3.
6.67%
2019 RGDP Growth, Base Year=2018
9.03%
2019 RGDP Growth, Base Year=2019
2019 RGDP Growth, Chain-weighted
√6.67 × 9.03 = 7.76%
2019 RGDP Growth (Base Year: 2018) =
,
2019 RGDP Growth (Base Year: 2019) =
,
,
,
,
,
× 100 =
× 100 =
2019 RGDP Growth (Chain-weighted) = √6.67 × 9.03 = 7.76%
Page 2 of 4
,
,
,
,
× 100 = 6.67%
× 100 = 9.03%
ECON3301- Winter 2022
SMU – SSB
Question 3.
Assume Macrolakes is at the Steady State. Using the illustration of the Solow Growth Model, explain
what happens to the steady state values if foreign workers immigrate to Macrolakes.
Fully label your figure.
Answer
As L ↑ we have that (?/?) ↓. Therefore, the country will no longer be at the steady state. But, at the new
point (e.g. Red Dashed Line), the depreciation is lower than the saving. Hence, K/L gradually increases,
and the country converges back to its old steady state.
Note that since none of the exogenous variables (Technology/Productivity, Saving rate and Depreciation
rate) has changed, the steady state will not change.
Y/L
Output per worker
Depreciation
Saving
K/L
Page 3 of 4
ECON3301- Winter 2022
SMU – SSB
Question 4.
Assume Macrolakes is at the Steady State. Using the illustration of the Solow Growth Model, explain
what happens to the steady state values if a portion of Macrolakes’ capital is destroyed by a natural
disaster.
Fully label your figure.
Answer
As K ↓ we have that (?/?) ↓. Therefore, the country will no longer be at the steady state. But, at the new
point (e.g. Red Dashed Line), the depreciation is lower than the saving. Hence, K/L gradually increases,
and the country converges back to its old steady state.
Note that since none of the exogenous variables (Technology/Productivity, Saving rate and Depreciation
rate) has changed, the steady state will not change.
Y/L
Output per worker
Depreciation
Saving
K/L
Page 4 of 4
ECON3301- Winter 20212
SMU – SSB
Intermediate Macroeconomics – Practice Set 6
Professor: Dr. Maryam Dilmaghani
1. Labour demand function results from
a. Marginal productivity of capital
b. Marginal productivity of labour
c. Consumption Fluctuations
d. A combination of the above
2. With an increase in productivity, usually
a. Labour demand shifts to the left
b. The marginal productivity of labour increases
c. Labour supply shifts to the right
d. All of the above
3. With an increase in productivity, usually
a. Labour demand shifts to the right
b. The marginal productivity of labour increases
c. Labour supply shifts to the left
d. All of the above
4. In the labour market, the equilibrium Real Wage is determined by
a. Labour supply
b. Labour demand
c. Labour unions
d. Both (a) and (b)
5. Generally, with an increase in productivity, the Real Wage
a. Increases
b. Decreases
c. Remains the same
d. All of the above options are possible
6. Generally, with an increase in productivity, the level of employment
a. Increases
b. Decreases
c. Remains the same
d. All of the above options are possible
7. Labour Supply curve shifts right if
a. Other Income increases
b. Other Income decreases
c. Capital input increases
d. None of the above
Page 1 of 2
ECON3301- Winter 20212
SMU – SSB
8. Labour Supply curve shifts right if
a. Production Costs increase
b. Production Costs decrease
c. Capital input increases
d. None of the above
9. Labour Demand curve shifts right if
a. Productivity decreases
b. Real Wage decreases
c. Labour Supply increases
d. None of the above
10. Labour Demand curve shifts left if
a. Productivity increases
b. Real Wage decreases
c. Labour Supply increases
d. None of the above
Page 2 of 2
ECON3301-Winter 2022
SMU – SSB
Intermediate Macroeconomics – Practice Set 5
Professor: Dr. Maryam Dilmaghani
1. The economic growth rate usually
a. is higher when the GDP per Capita is lower
b. is lower when the GDP per Capita is higher
c. has no relationship with the GDP per Capita
d. Both a and b
2. The production is best defined as
a. the supply of labour and capital
b. the act of assembling existing outputs in new products
c. the process of transforming inputs into output
d. All of the above
3. Production is best defined as
a. the supply of labour and capital
b. the act of assembling imports into exports
c. the process of transforming inputs into output
d. All of the above
4. In the Solow Growth Model, the Steady State growth rate is higher when
a. The depreciation rate is lower
b. The productivity is higher
c. The saving rate is lower
d. None of the above
5. In the Solow Growth Model, at the Steady State, we have
a. A zero unemployment rate
b. A zero inflation rate
c. A zero economic growth rate
d. A zero investment rate
6. In the Solow Growth Model, at the Steady State, we have
a. A zero unemployment rate
b. A zero inflation rate
c. A zero saving rate
d. None of the above
7. With an increase in the Capital input
a. The Steady State output per worker increases
b. The Steady State capital per worker increases
c. The Steady State saving rate increases
d. The Steady State values remain the same
Page 1 of 3
ECON3301-Winter 2022
SMU – SSB
8. With an increase in the Labour input
a. The Steady State output per worker increases
b. The Steady State capital per worker increases
c. The Steady State saving rate increases
d. The Steady State values remain the same
9. To compare economic development across the globe, we can use
a. the GNP
b. the GDP
c. the GNI per capita
d. None of the above
10. To compare economic development across the globe, we can use
a. the GNI
b. the GDP
c. the GDP per capita
d. All of the above
11. Developing countries usually
a. are less agricultural than the rest of the world
b. have strong manufacturing sectors
c. have low levels of income inequality
d. None of the above
12. Developing countries usually
a. have a high level of capital per worker
b. have a saving rate higher than developed countries
c. have a high Human Development Index
d. None of the above
13. According to the Solow Growth Model, the Steady State growth rate is higher when
a. The depreciation rate is lower
b. The productivity is lower
c. The saving rate is lower
d. None of the above
14. According to the Solow Growth Model, the Steady State output per worker is higher when
a. The depreciation rate is lower
b. The productivity is higher
c. The saving rate is higher
d. All of the above
Page 2 of 3
ECON3301-Winter 2022
SMU – SSB
15. At the Steady State, we have
a. A zero GDP per capita
b. A zero Head Count Ratio
c. A zero economic growth rate
d. All of the above
16. The economic growth usually declines
a. As output increases
b. As inputs decrease
c. As exports increase
d. As imports increase
17. The GDP per capita inadequately captures
a. Income inequality
b. Infant mortality
c. Literacy rate
d. All of the above
18. The HDI
a. arguably adds little information above the GDP per capita
b. can be used to estimate the GDP
c. is developed by the World Economic Forum
d. All of the above
19. The HDI is comprised of
a. exports – imports + taxes
b. incomes + exports – imports – taxes
c. GDP +GNI + Life Expectancy
d. None of the above
20. The HDI is comprised of
a. exports, imports, taxes
b. incomes, exports, imports, taxes
c. GNI per capita, education, and life expectancy
d. None of the above
Page 3 of 3
ECON3301-Winter 2022
SMU – SSB
Intermediate Macroeconomics –Practice Set 4, Answer Key
Professor: Dr. Maryam Dilmaghani
A.
Work with the Solow Growth Model, assuming an economy at the Steady State. Show what will happen
to the Steady State values if the saving rate falls.
(No need to explain why).
Answer
At the new Steady State:
g*=0 (as always)
New y* and New k* < Old y* and Old k*.
y
k
Page 1 of 2
ECON3301-Winter 2022
SMU – SSB
B.
Work with the Solow Growth Model, assuming an economy at the Steady State. Show what will happen
to the Steady State values if the depreciation rate falls.
(No need to explain why).
Answer
At the new Steady State:
g*=0 (as always)
New y* and New k* > Old y* and Old k*.
y
k
Page 2 of 2
ECON3301- Winter 2022
SMU – SSB
Intermediate Macroeconomics –Practice Set 3, Answer Key
Professor: Dr. Maryam Dilmaghani
Assume that Macrolakes is at the Steady State. Using the illustration of the Solow Growth Model, explain
what happens to the steady state values if Macrolakes received K (Capital) through a foreign aid program.
As K↑ we have ( )=k↑. Therefore, the country will no longer be at the steady state. But, at the new point
(e.g. Red Dashed Line), the Investment/Saving is lower than Total Depreciation. Hence, K/L gradually
falls, and the country converges back to its old Steady State.
Note that since none of the exogenous variables (Productivity=Technology, Saving rate and Depreciation
rate) has changed, the Steady State values will not change.
Y/L
Output per worker
Depreciation
Saving
K/L
Page 1 of 1
ECON3301- Winter 2022
SMU – SSB
Intermediate Macroeconomics – Practice Set 1
Professor: Dr. Maryam Dilmaghani
1. The Real GDP indicates
a. The net wealth of a country
b. The value of a country’s output
c. The growth of a country
d. All of the above
2. The Real GDP is
a. Unaffected by the changes in outputs
b. Usually greater than the nominal GDP
c. The sum of after tax nominal incomes
d. None of the above
3. Plotting the Real GDP over time usually shows
a. An upward trend
b. A downward trend
c. A constant average
d. All of the above options are possible
4. The Real Business Cycles refer to
a. The upward trend of the Nominal GDP
b. The upward trend of the Real GDP
c. The long-run growth of the Real GDP
d. None of the above
5. The Real GDP growth rate is reflected in
a. The deviations from the average Real GDP
b. The average Real GDP
c. The trend of the Real GDP
d. None of the above
6. The change of the base year
a. Affects the value of the Real GDP
b. Affects the value of the Nominal GDP
c. Affects the rate of GDP growth
d. Both a and c
7. The chain-weighting approach is
a. Unaffected by the choice of the base year
b. Unaffected by the changes in the outputs
c. Unaffected by the changes in Real GDP
d. Unaffected by the changes in productivity
Page 1 of 3
ECON3301- Winter 2022
(?? = 2019) = 4% and ?
8. If ?
a. ? (2019) = √4 + 5 %
b. ? (2019) = √4 × 5 %
c. ? (2019) =
d. ? (201) =
SMU – SSB
(?? = 2018) = 5%, then
%
%
9. The economic growth rate usually declines
a. As output increases
b. As inputs decrease
c. As exports increase
d. As imports increase
10. Circle the correct statement:
a. The output of a Canadian working abroad is calculated in the Canadian GDP
b. The output of a foreigner working in Canada is excluded from the Canadian GDP
c. The value of services is excluded from the GDP
d. None of the above
11. Circle the correct statement:
a. The GDP is calculated based on the dollar value of the final goods
b. The GDP is calculated based on the quantity of the final goods and services
c. The GDP is calculated based on the quantity of the inputs
d. None of the above
12. The choice of the base year
a. affects the value of the nominal GDP
b. affects the value of the real GDP
c. only affects the value of final services
d. None of the above
13. Circle the correct statement
a. The real GDP of the base year is smaller than its nominal GDP
b. The real GDP of the base year is greater than its nominal GDP
c. The real GDP of the base year is equal to its nominal GDP
d. All of the above options are possible
14. Circle the correct statement:
a. The GDP indicates a country’s level of unemployment
b. The GDP indicates a country’s inflation rate
c. The GDP indicates a country’s income per capita
d. None of the above
Page 2 of 3
ECON3301- Winter 2022
SMU – SSB
15. Circle the correct statement:
a. The GDP is calculated based on the dollar value of the final goods
b. The GDP is calculated based on the quantity of the final goods and services
c. The GDP is calculated based on the value of exports minus imports
d. None of the above
16. Circle the correct statement:
a. The output of a Canadian working abroad is calculated in the Canadian GDP
b. The output of a foreigner working in Canada is excluded from the Canadian GDP
c. The value of exports is excluded from the GDP
d. None of the above
17. Capital per worker increases if
a. Depreciation rate is 0
b. Saving rate is 0
c. Output is maximized
d. None of the above
18. Saving can be conceptualized as proportional to
a. depreciation rate
b. output per worker
c. capital per worker
d. None of the above
19. Investment can be conceptualized as proportional to
a. depreciation rate
b. output per worker
c. capital per worker
d. None of the above
20. The economic growth rate usually
a. is higher when the GDP per Capita is lower
b. is lower when the GDP per Capita is higher
c. has no relationship with the GDP per capita
d. Both a and b
Page 3 of 3
ECON3301 –Winter 2022
SMU – SSB
Intermediate Macroeconomics – Practice Set 2, Answer
Professor: Dr. Maryam Dilmaghani
We are at the point identified by the red circle, what will happen next?
Answer
As δk>sy (Total Depreciation is larger than Investment/Saving), k ↓ and y ↓; but not,
forever. The decline stops at the intersection of δk and sy.
=y
Capital per Worker (K/L)=k
Page 1 of 1

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