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UNC-Chapel Hill ECON 101 - Econ 101 Midterm Exam

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1Econ 101 M. SalemiEcon 101 M. SalemiMidterm ExaminationMidterm ExaminationThe exam is The exam is Tuesday, November 3Tuesday, November 3in class.in class.It comprises 30It comprises 30--35 multiple choice questions.35 multiple choice questions.It covers material in lectures 10 and 12It covers material in lectures 10 and 12--18.18.The exam is The exam is ““closed books and notesclosed books and notes””and the and the honor code will be strictly enforced.honor code will be strictly enforced.Please bring a Scantron sheet and your UNC ID.Please bring a Scantron sheet and your UNC ID.Late comers will be barred.Late comers will be barred.You may not leave the room during the exam.You may not leave the room during the exam.Practice questions and the key for backPractice questions and the key for back--ofof--chapter chapter problems are posted on the web page.problems are posted on the web page.Econ 101 M. SalemiEcon 101 M. SalemiSpending, Income and Gross Spending, Income and Gross Domestic ProductDomestic ProductGDP is a Measure of a NationGDP is a Measure of a Nation’’s Outputs OutputSeveral caveats about GDPSeveral caveats about GDPThe State of the US Economy The State of the US Economy What Have We Learned?What Have We Learned?Nominal and Real GDP0.02000.04000.06000.08000.010000.012000.014000.016000.0Jan-47Jan-50Jan-53Jan-56Jan-59Jan-62Jan-65Jan-68Jan-71Jan-74Jan-77Jan-80Jan-83Jan-86Jan-89Jan-92Jan-95Jan-98Jan-01Jan-04Jan-07Jan-10Billions of Dollars0.02000.04000.06000.08000.010000.012000.014000.016000.0Billions of 2005 DollarsReal GDPNominal GDPEcon 101 M. SalemiEcon 101 M. SalemiGross Domestic Product: (GDP) is a Measure of a Nation’s Output.GDP measures how much an economy produces in a given period, such as a quarter or a year.Because one cannot add “apples and oranges,”GDP is constructed by adding together the market value of apples and oranges. GDP avoids double counting by only counting the value of final goods and services.2Econ 101 M. SalemiEcon 101 M. SalemiProduction in Production in ““Simple LandSimple Land””BreadBreadWineWineDaycareDaycareNominalNominalGDPGDPReal Real GDPGDPYearYearLoavesLoavesPricePriceJugsJugsPricePriceHoursHoursPricePrice20052005100100$2.00$2.005050$10$10250250$3.00$3.0020062006125125$2.10$2.104040$12$12250250$3.25$3.2520072007115115$2.40$2.406060$8$8250250$3.40$3.40Econ 101 M. SalemiEcon 101 M. SalemiGDP is Computed by Adding Together GDP is Computed by Adding Together The Market Value of Final ProductsThe Market Value of Final Products..$1606$1606$1450$1450$1555$1555$3.40$3.40250250$8$86060$2.40$2.4011511520072007$3.25$3.25250250$12$124040$2.10$2.1012512520062006$3.00$3.00250250$10$105050$2.00$2.0010010020052005PricePriceHoursHoursPricePriceJugsJugsPricePriceLoavesLoavesYearYearReal Real GDPGDPNominalNominalGDPGDPDaycareDaycareWineWineBreadBreadEcon 101 M. SalemiEcon 101 M. SalemiNominal and Real GDPNominal and Real GDPNominal GDP is measured in current dollars, Nominal GDP is measured in current dollars, Real GDP is measured in constant dollars.Real GDP is measured in constant dollars.Current year quantities are valued at base Current year quantities are valued at base year prices.year prices.Real GDP in the U.S. is currently measured Real GDP in the U.S. is currently measured in Year 2005 Dollars.in Year 2005 Dollars.Econ 101 M. SalemiEcon 101 M. SalemiReal GDP is Computed by Using Base Real GDP is Computed by Using Base Year (2005) Prices to Value Current Year (2005) Prices to Value Current Year Production Quantities.Year Production Quantities.$1450$1450$1606$1606$3.40$3.40250250$8$86060$2.40$2.4011511520072007$1555$1555$3.25$3.25250250$12$124040$2.10$2.1012512520062006$1450$1450$3.00$3.00250250$10$105050$2.00$2.0010010020052005PricePriceHoursHoursPricePriceJugsJugsPricePriceLoavesLoavesYearYearReal Real GDPGDPNominalNominalGDPGDPDaycareDaycareWineWineBreadBread3Econ 101 M. SalemiEcon 101 M. SalemiUse Your Clickers to Answer Use Your Clickers to Answer The Following The Following Graded Question.Graded Question.Econ 101 M. SalemiEcon 101 M. SalemiIn 2007, Real GDP in Simple Land isIn 2007, Real GDP in Simple Land isBreadBreadWineWineDaycareDaycareNominalNominalGDPGDPReal Real GDPGDPYearYearLoavesLoavesPricePriceJugsJugsPricePriceHoursHoursPricePrice20052005100100$2.00$2.005050$10$10250250$3.00$3.0020062006125125$2.10$2.104040$12$12250250$3.25$3.2520072007115115$2.40$2.406060$8$8250250$3.40$3.40A.A.$1450$1450B.B.$1490$1490C.C.$1580$1580D.D.$1606$16062007 Real GDP in Simple Land2007 Real GDP in Simple LandNote: 115 x $2.00 + 60 x $10 + 250 x $3.00 = $1580 Note: 115 x $2.00 + 60 x $10 + 250 x $3.00 = $1580 Econ 101 M. SalemiEcon 101 M. Salemi$1580$1580$1400$1400$1450$1450$1606$1606$3.40$3.40250250$8$86060$2.40$2.4011511520072007$1555$1555$3.25$3.25250250$12$124040$2.10$2.1012512520062006$1450$1450$3.00$3.00250250$10$105050$2.00$2.0010010020052005PricePriceHoursHoursPricePriceJugsJugsPricePriceLoavesLoavesYearYearReal Real GDPGDPNominalNominalGDPGDPDaycareDaycareWineWineBreadBreadEcon 101 M. SalemiEcon 101 M. SalemiGDP can be divided into four GDP can be divided into four expenditure components.expenditure components.ConsumptionConsumptionInvestment Investment Government SpendingGovernment SpendingNet Exports = Net Exports = ExportsExports––ImportsImportsGDP = C + I + G + NXGDP = C + I + G + NX4Econ 101 M. SalemiEcon 101 M. SalemiExpenditure Components of Expenditure Components of U.S. GDP, 2007 (billions of dollars)U.S. GDP, 2007 (billions of dollars)Consumption 9,732.0Durable goods 1,079.6 Nondurable goods 2,833.0Services 5,819.4Investment 2,132.3Business fixed investment 1,483.2Residential investment 641.5Inventory investment 7.6Government purchases 2,691.4Net exports -712.7Exports 1,640.3Imports 2,353.0Total: Gross domestic product 13,843.0Econ 101 M. SalemiEcon 101 M. SalemiHow GDP Shares Have VariedHow GDP Shares Have VariedGDP Share Components‐0.1000.0000.1000.2000.3000.4000.5000.6000.7000.800Jan‐47Jan‐50Jan‐53Jan‐56Jan‐59Jan‐62Jan‐65Jan‐68Jan‐71Jan‐74Jan‐77Jan‐80Jan‐83Jan‐86Jan‐89Jan‐92Jan‐95Jan‐98Jan‐01Jan‐04Jan‐07Jan‐10ConsumptionInvestmentGovernment SpendingNet ExportsEcon 101 M. SalemiEcon 101 M. SalemiUse Your Clickers to Answer Use Your Clickers to Answer The Following The Following Graded Question.Graded Question.Econ 101 M. SalemiEcon 101 M. SalemiWhat Themes Do You See in the Data?What Themes Do You See in the Data?GDP Share


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