ECO2013 Principles of Macroeconomics Final Exam

ECO2013 Principles of Macroeconomics Final Exam
Dr. Cody Reinhardt
University of West Florida, Spring 2021
Instructions
The final exam will be take-home style, posted May 4th at 9 AM and due May 6th at 10 AM. After completion, you should scan and upload your test as a single .pdf file You can email it to me or submit it on canvas, I will have a submission available under assignments.
It is VERY important that you do not collaborate or share answers with other students, or use answers you found online from an outside source. Submissions will be scanned with plagiarism software to see if answers are copied. It is the responsibility of the student to understand academic honesty policy. If you are concerned or unsure about something in regards to this, please ask before you submit.
This exam has 12 questions. You will choose only 10 questions to answer and submit. This choosing serves two purposes: It allows students to select questions for which they are most knowledgeable and confident, and it helps me to determine which questions might be unclear or overly complicated when students largely don’t answer them.
Answers are to be either typed or hand-written and scanned into 1 .pdf document. There are a few online resources to combine individual pdfs into one, and if you are typing, you likely will need to insert images for graphing parts (unless you are quite good in paint, word, ect at creating graphs.) Please only use photos of handwritten answers as a last resort.
Be sure that you answer each question clearly and completely. Most will have multiple parts; each part should be addressed with at least a couple sentences. Examples must be explained, and math answers require you to show work. Note that I don’t explicitly grade on spelling, grammar, ect, but I need to be able to understand your answer. The expectation for each question is between 0.25 and 0.5 page for your answer, assuming hand- written.
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1. Perhaps you would rather be somewhere else, rather than taking this exam. Think about what you would rather be doing right now. Define opportunity cost, and then using this definition, explain your opportunity cost for taking this exam.
2. Draw and completely label a supply and demand graph showing the market of corn in the USA. The price of fertilizer, something corn producers use in the process of making corn, INCREASES. Show the effect this has on the market. (Hint: 1 line moves). Is the new equilibrium price higher or lower than before?
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3. How does the market price mechanism answer the following questions:
• What goods will be produced?
• How will production be done? (With what resources and with what technology)
• To whom will goods be distributed?
4. Define expansionary monetary policy. What are the goals of such a policy? Give an example of a recent expansionary monetary policy.
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5. What are the four components of GDP? For each, provide one example and explain why your example fits with this component.
6. Suppose there are 250 working age population, 150 employed individu- als, and 30 unemployed individuals. With this information, calculation labor force participation and unemployment rate. How do these two figures com- pare to recent figures in the US?
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7. Define government surplus and deficit. Which has the US been tending to fall under?
8. Suppose the CPI says that prices increased 10% in 2020. Would this mean that everyone is 10% worse off? In other words, how might CPI overstate the cost of price increases?
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9. What is the primary factor which affects economic growth? What items affect the above factor? (Hint: there are 6)
10. Define structural unemployment. Give two reasons why structural un- employment has increased since the beginning of 2020 (Hint: Covid-19 and policy response related.)
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11. Consider the following PPF graph:
Give the definitions for an efficient point, inefficient point, and unattainable point. Identify one point on this graph for EACH, and explain why the point meets the definition.
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12. Describe in detail the three uses of money in an economy.
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