Final Exam. Thursday, December hours, 30 minutes

Transcription

1 San Faniso Sa Univsi Mihal Ba ECON 30 Fall 0 Final Exam husda, Dmb 5 hous, 30 minus Nam: Insuions. his is losd book, losd nos xam.. No alulaos of an kind a allowd. 3. Show all h alulaions. 4. If ou nd mo spa, us h bak of h pag. 5. Full labl all gaphs. Good Luk

2 . (5 poins). Suppos ha GD in h U.S. is wi a lag as ha of China. Also suppos ha h U.S. GD is no gowing a all, whil Chins GD gows a 7% p a. a. How man as would i ak China o ah up wih h U.S. in ms of GD? (Insuions: simplif ou quaions up o h poin whn ou mus us a alulao). GD GD 0 GDCHN 0.07 GDCHN ln() ln(.07) US CHN ln() ln(.07) b. Using h "ul of 70", giv appoxima answ o h pvious qusion as. Using h "ul of 70" again, how man as appoximal would i ak China o ah up wih h U.S., if h U.S. GD gows a 3.5% p a? 70 0 (7 3.5) as Now China is ahing up wih h U.S. a 3.5% a.

3 . (5 poins). Consid h Classial modl sudid in lass, and bifl dsibd as follows. h onsum divs uili fom onsumpion C and lisu l aoding o U ( C, l) lnc ( ) lnl. H is ndowd wih h hous whih h an alloa bwn lisu and wok L S. h al wag is w. h onsum owns a fim and ivs dividnd inom (pofi). h fim podus oupu Y using hnolog Y AK L D, wh A is poduivi paam (F), K is h apial ownd b h fim, and L D is labo mplod b h fim. h govnmn axs labo inom a h a of w and dividnd inom a h a of. a. Suppos ha labo inom and dividnds a axd a h sam a w 0%. h apial sha in h onom is 0.35, quilibium oupu is 000 and quilibium mplomn is 40. Find h quilibium C, govnmn onsumpion piva onsumpion and unmplomn a in his onom. G, dividnd inom C G ( ) Y Y Y UR , alwasin his modl

4 b. Now suppos ha h govnmn aisd h ax a, and i boms w 5%. Find h nw quilibium oupu, mplomn, piva onsumpion, govnmn onsumpion dividnds and h unmplomn a. ( Y, L, C, G,, UR ). Y L C G UR 000, unhangd b 40, unhangd b ( ) Y Y , unhangd b 0, alwasin his modl 3

5 . Suppos ha h onom of Japan is dsibd b h lassial modl. Using full labld gaphs of h poduion funion and labo mak, illusa h ff of dsuion of phsial apial b a sunami ( K ) on quilibium oupu ( Y ), quilibium al wag ( w ) and quilibium mplomn ( L ). Y Y oduion funion Y w L L L S Labo mak w w L D L L 4

6 3. (0 poins). Consid h wo-piod modl of onsumpion and saving disussd in lass. h a N idnial onsums ha liv fo wo piods ( and ) and div uili fom onsumpion and in h wo piods: U (, ). Consums iv inom and in h wo piods and pa a lump sum ax and o h govnmn. h onsums did how muh o onsum in ah piod and how muh o sav in h fis piod. W dno h saving in h fis piod b s. Consums an boow and lnd a al ins a, whih is assumd xognousl givn. hus h budg onsains in h wo piods a BC : s BC : ( ) s h govnmn olls ax vnus N and N, and spnds G and G in h wo piods. h govnmn an boow and lnd a al ins a wih h onsain ha h psn valu of spnding = psn valu of axs G G a. (5 poins). Suppos ha h al ins a is 7% and h govnmn inass axs in h fis piod b 00. Find h nssa hang in h sond piod s axs ha would kp h psn valu of axs unhangd. Show ou alulaions ( )

7 6 b. (5 poins). Suppos ha h onsum s uili is ) )ln( ( ) ln( ), ( U. Wi h onsum s dmand fo onsumpion in boh piods and his suppl of saving. Wiing h onsum s poblm wih h lifim budg onsain hlps fo his sion. s.. ) ) ln( ( ) ln( max, Now w an s ha sin h pfns a of h Cobb-Douglas fom, h onsum will spnd a fixd faion of his lifim inom on and : ) ( h saving fom BC : s ) )( (

8 . (5 poins). Suppos ha inom in h fis piod inass b $000. Find h suling hang in onsumpion of boh piods, and h hang in saving, if h al ins a is 7% and s ( )( ) ( ) d. (5 poins). Is h sul in h las sion onsisn wih onsumpion smoohing? Explain bifl. Ys, (600 < 000). 7

9 4. (5 poins). Consid h quani ho of mon quaion: MV Y. a. (5 poins). Wi his quaion in appoxima gowh as. Mˆ Vˆ ˆ Yˆ b. (5 poins). Suppos ha vloi is onsan, h gowh a of al GD is 8% and h nal bank wans o ahiv inflaion of 0%. Wha is h quid gowh of h mon suppl? Mˆ Vˆ? 0% ˆ Yˆ 0% Mˆ 8% 8%. (5 poins). Now suppos ha vloi gowh is dasing in h gowh a of mon: Vˆ 0.5Mˆ, oh hings bing h sam as in h pvious sion. How would ou answ h pa b hang? Mˆ Vˆ? 0% Mˆ 0.5Mˆ Yˆ 0.5Mˆ Yˆ ˆ Yˆ 8% 0% Mˆ 6% 8% 8% 8

10 5. (0 poins). Suppos ha h publi wans o hold un/dposi aio of d 0., and h quid sv/dposi aio is d h iniial onsolidad balan sh of ommial banks is: Asss Capial + Liabiliis R 80 D 00 B G 5 L a. (5 poins). Find h mona bas, h mon suppl and h mon mulipli in his onom. CU MB CU R M CU D d 0. mm d d ( o M mm MB) 9

11 b. (0 poins). Suppos ha h nal bank dus h quid sv/dposi aio o 0%. Find h nw mona bas, mon mulipli, h mon suppl and psn h nw balan sh of h ommial banks. MB 0 d 0. mm 3 d d M mm MB D MB d d d 0. R MB 0 60 d d d 0. CU MB 0 60 d d Asss Capial + Liabiliis R 60 D 300 B G 5 L

12 . (5 poins). Suppos h FYM bank (whih sands fo "Fog You Mon") has h following balan sh: Asss Capial + Liabiliis oxi Asss = 40 Capial = 0 Good asss = 80 Liabiliis = 00 Cil h o answ. 0 0 i. his bank is balan sh insolvn. ii. his bank ould bom balan sh insolvn if oxi asss will un ou o b woh mo han 0. iii. In od o pvn balan sh insolvn fo his bank, h govnmn an bu all h oxi asss fo a pi low han 0. iv. his bank ould bom balan sh insolvn if oxi asss will un ou o b woh lss han 0. v. Non of h abov.

13 6. (5 poins). L and b h pi indxs in h domsi onom and foign onom spivl. Suppos ha h pi indx is a wighd avag of add goods (indxd b ) and non-add goods (indxd b N): 0 0 N N a. (0 poins). Assuming ha: () h wighs on add and non-add goods in h pi indx a fixd fo boh ounis, () h aio of pis of non-add o add goods is fixd in boh ounis, and (3) h holds fo add goods onl, pov ha h laionship bwn h gowh of h xhang a ( ê ), h domsi inflaion ( ) and foign inflaion ( ) is: ê. N N N N / / h m baus of assumpion (3), i.. h holds fo add goods. h m in h baks is onsan baus of assumpions () and (). hus, h al xhang a mus b onsan. ˆ 0 ˆ ons

14 b. (5 poins). Fo sval as, China pggd is un o h U.S. dolla, mainl in od o ahiv low inflaion. Using h modl dsibd in his qusion, dmonsa how China an ahiv low inflaion b pgging is un o h U.S. dolla. Fixing h xhang a mans ha ˆ 0 and w hav ˆ 0 hus, h domsi inflaion boms h sam as h foign inflaion o whih h un is pggd. 3