ECON 203 – INTRODUCTION TO
MACROECONOMICS COMMON FINAL
EXAMINATION AND ANSWERS (Concordia
University)
, lOMoAR cPSD| 6353920
Concordia University
Department of Economics
ECON 203 – INTRODUCTION TO MACROECONOMICS
Summer
COMMON FINAL EXAMINATION AND ANSWERS
FAMILY NAME: GIVEN NAME(S):
STUDENT NUMBER:
Please read all instructions carefully.
1. This is a three-hour exam (180 minutes). The questions are worth 150 marks altogether. It is a good strategy
tospend one minute per mark for your answers (150 minutes) and spend the remaining time (30 minutes) to
review your answers.
2. This exam consists of four parts:
(i) Part I: 15 multiple-choice questions (30 marks);
Part II: Conceptual questions, transformed into 15 multiple-choice questions, (30 marks);
Part III: Five algebraic questions, transformed into 25 multiple-choice questions, (50 marks),
andPart IV: Multi-part policy questions, answer all parts (40 marks).
1. Write your name, student ID and answers to the multiple-choice questions (parts I, II and III) on the
computerscan-sheet with a PENCIL. For Part IV, write all your answers on this exam with pen or pencil. Do
not use additional booklets.
2. You are allowed to use a non-programmable calculator and a paper dictionary.
3. You are not allowed to tear any pages out of this exam.
Grades:
Parts I+II+III:
Part IV:
, lOMoAR cPSD| 6353920
Total: Part I: Multiple Choice Questions (Total=30 marks).
1. Suppose you have the following measure of nominal GDP by the income
approach:PY = W + BI + CCA + TIN, where PY = 700 + 100 + 100 + 100 = 1,000
Now an increase in the average wage rate in the economy increases employment income by 5 percent without
any change in total employment or real GDP. What effect would this increase in employment income have on the
costsof production and the GDP deflator?
A) Increases factor costs and increases GDP deflator.
B) Decreases factor costs and increases GDP deflator.
C) Factor costs remain constant and increases GDP deflator.
D) Factor costs remain constant and decreases GDP deflator.
E) None of the answers is correct.
2. Continue with the previous question: If business raised prices to pass on these changed costs to buyers, how
muchwould prices change, as measured by the GDP deflator?
A) Rises by 2.5%.
B) Rises by 3.5%.
C) Rises by 5%.
D) Falls by 2.5%.
E) Falls by 5%.
3. Suppose a country's population grows by 3% while its nominal GDP grows by 6% and the GDP deflator increases
from 125 to 127.5, then the standard of living as measured by per capita real GDP .
A) Improves by 1%
B) Improves by 2%
C) Improves by 3%
D) Falls by 1%
E) Falls by 2.5%
4. Suppose the U.S. is an oil importer in the world. Recently, the price of oil has been decreasing. Which of
thefollowing is (are) likely to take place?
A) The U.S. government is more likely to narrow its fiscal deficits.
B) The inflation rate in the U.S. is likely to rise.
C) The U.S. dollar is likely to depreciate.
D) The U.S. trade deficit is likely to widen.
E) All of the answers are correct.
5. Which of the following is (are) CORRECT about the value of Yp?
A) Monetary policies cannot affect Yp but fiscal policies can.
B) Input costs change in the long run to bring the short run Y back to Yp.
C) Okun’s law predicts that if Y>Yp by 5%, unemployment rate rises by 2.5%.
D) The unemployment rate associated with Yp is the cyclical unemployment rate.
E) All of the answers are correct.
6. Other things remaining the same, if households suddenly decide to spend a higher fraction of their income
onimports, then the AE function will and the goods market multiplier will .
A) Become steeper; fall.
B) Become steeper;
rise.
C) Become flatter; fall.
D) Become flatter; rise.
E) Make a parallel shift downward; fall.
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