Economics Essay

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ECN500M Review Questions 31 August 2012 ***************************************************************************** Topics covered: Macro intro & macro concerns (growth, unemployment, inflation), national income accounting, aggregate demand and supply, BOP, & monetary & fiscal policies, labor market and productivity. Four questions (with 4-5 sub questions) will be asked in your final exams: A reminder, for those who exceeded the maximum allowable absences of 2.5 meetings, unless you have valid excuses, will be given a final grade of 0.0 even if you perfect all exams and the business critique. Business article critique: Submission on 1 Sept (Saturday), 1445-1800, XR0525. You should focus on giving solid and logical analysis based on as many correctly applied macroeconomic theories and principles and concepts. You can tackle several (interrelated) key events/issues in each article. ***************************************************************************** 1. Given the following data for economy OksLang with currency (Oh), answer the succeeding questions: C= 200 +0.8Y; I=Oh100; AE = C + I. The equilibrium condition is AE = Y. (#6 C19 pp. S14) a. what is the marginal propensity to consume in OksLang; marginal propensity to save? b. Graph AE and AE=Y and determine the equilibrium income. c. Supposed investment is increased to Oh110, (i) what is the new equilibrium income? (ii) By how much does the Oh10 increase in planned investment change equilibrium income? (iii) What is the value of the multiplier. d. (i) Calculate the saving function for OksLang. (ii) Plot the saving function on a graph with the investment function. (iii) Explain why the equilibrium income in this graph must be the same as in (b). 2. Some economists came up with the following estimates of macroeconomic variables for Problematique country:

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