Balochistan University of Information Technology, Engineering & Management Sciences
(BUITEMS), Quetta
Department Of Economics
Mid Semester Examination Fall 2011
Intermediate Macroeconomics
BSECO 5th
Objective Part
Student Name: _________________________
Enrollment No: _________________
Time: minutes
Total marks: 10
Q. Encircle the Correct Option.
a) Nominal GDP might give a misleading measure of the change in output between two
periods because
(a) price levels may change
(b) it does not count the sale of company shares and bonds
(c) it fails to consider intermediate goods, such as those that are used to produce other
goods and services
(d) it fails to include government transfers
b) Consider the table below for an economy where consumers consume apples and oranges.
Year
2000
2001
2002
Price/unit Quantity Price/unit Quantity Price/unit Quantity
Apples
€ 1.00
20
€ 1.10
21
€ 1.50
25
Oranges
€ 0.50
50
€ 0.60
55
€ 1.00
55
In 2002 nominal GDP growth for this economy equals
(a) -39.4 %
(b) +64.9 %
(c) -7.3 %
(d) +7.8 %
c) Which of the following is NOT included in gross domestic product
(a) the purchase of a new car
(b) the purchase of an existing house
(c) the phone bill
Balochistan University of Information Technology, Engineering & Management Sciences
(BUITEMS), Quetta
(d) a meal you buy at the university lunchroom
d) An economy produces three goods: cars, computers and oranges. Production units and
prices per unit for years 1998 and 1999 are as follows:
1998
Quantity
Cars
Computers
Oranges
1999
Price
Quantity
10
€2,000
12
4
€1,000
6
1,000
€1
1,000
.
Price
€3,000
€500
€1
Using 1999 as the base year, by what percentage does real GDP increase from 1998 to
1999?
(a) -17.5 %
(b) +21.2 %
(c) +29.0 %
(d) -22.5 %
e) Economic models in which demand fully determines output in the short run are known as
___________, while economic models that emphasize price adjustments and where output
is supply determined are known as ________________.
(a) Keynesian economics, Ricardian economics
(b) real business cycle economics, Keynesian economics
(c) general equilibrium, neoclassical economics
(d) Keynesian economics, neoclassical economics
Q2. Suppose that a house built in the first half of 2010 is sold as a rental property for $90,000
in the same year. Let total rental income for the 6 months be $6000, and estimate $600 of
depreciation for this same period. In the 2010 statistics, the proper entries for this house
would be:
a.
gross investment of ($0 / $600 / $6000 / $89,400 / $90,000),
b.
net investment of ($0 / $600 / $6000 / $89,400 / $90,000), and
c.
consumption expenditures of ($0 / $600 / $6000 / $89,400 / $90,000).
The construction and use of this house would therefore appear in the 2010 GDP
and NDP statistics as follows:
d.
GDP ($89,400 / $90,000 / $95,400 / $96,000);
e.
NDP ($89,400 / $90,000 / $95,400 / $96,000).
Balochistan University of Information Technology, Engineering & Management Sciences
(BUITEMS), Quetta
Department Of Economics
Mid Semester Examination Fall 2011
BS(ECO) 5th
Subjective Part
Student Name: _________________________
Enrollment No: _________________
Time: 60 minutes
Total marks: 15
Attempt All Questions.
All Questions Carry Equal Marks.
Q1: Write Short notes on: (5 marks)
a)
b)
c)
d)
e)
f)
g)
Why are exogenous variable considered to be constant in a model ?
Why is GDP considered to be a flow and not a stock ?
Draw the simple version of circular flow of income and discuss in few lines.
What is real GDP and GDP Deflator ?
Why do we not use intermediate goods in GDP?
What is Frictional and Cyclical Unemployment?
What is Full employment ?
Q2. Explain the different economic behaviours of Aggregate Supply according to School of
the thoughts. (5 marks)
Q3. The country of Easyliving produces just three goods: apples, T-shirts, and bicycles.
The prices of each good and the outputs for three years are listed in Table 5-2. (5 marks)
TABLE 5-2
Product
Apples
T-shirts
Bicycles
Year 1
P1
$1
6
80
Q1
50
100
90
Year 2
P2
$3
8
100
Measure the rate of inflation from:
1. year 1 to year 2.
2. year 2 to year 3.
Q2
60
140
100
Year 3
P3
$4
7
90
GDP Deflator
Q3
70
160
110
100
127
115
Balochistan University of Information Technology, Engineering & Management Sciences
(BUITEMS), Quetta
ANSWERS:
a) Exogenoue variable