Answer key to sample problems for test 1 (updated)
**I've had to make several updates as I put this together rather quickly. I don't mind correcting errors. However, you must understand that I work on a different schedule than most of you. In the future, don't expect me to be able to correct things and troubleshoot late in the evening. I go home at 5 and I'm allowed to indulge in things to relax. I'm allowed to drink alcohol and I'm allowed to take pain killers because of my tumor issue. And watch the Cavaliers or some other team play ball. It would be great if you guys could appreciate it if I'm not always ready and able and happy to deal with your issues when it gets past 5 or 6 p.m. Thanks for understanding. Good luck on your test.**
I hope these are correct.
1-D, 2-C, 3-A, 4-D, 5-A, 6-D,
7-A, 8-C, 9-D, 10-C, 11-C, 12-A, 13-D,
14-D, 15-C, 16-C, 17-D, 18-B*,
19-A, 20-D**, 21-B, 22-D, 23-D, 24-B,
25-D, 26-D, 27-B***, 28-A****, 29-A.
*NS (or S) = Y - C - T, Y - T is often called "disposable income".
Problems 9 and 15 use the terminology capital account (KA). This is often used to refer to the Financial Account (FA). In both of these you should think of capital account as financial account.
Historical footnote: Until the national income accountants began referring to line 39 as the "Capital Account", economists generally referred to the "bottom part" of the BOP as the capital account and called it KA. In modern text books economists have adopted the terminology newly consistent with the national income accountants (FA: financial account). The problems 9 and 15 are historical outtakes.
I have checked the test document and I consistently use the terminology "financial account" or FA.
**This was originally marked C: Investement increases. Its the opposite, D: Investment decreases. This is crowding out. Thanks "LaUr.......".
***27 is B, not D as originally reported. It is negative public savings so it will decrease national savings. My bad.
****28 was originally marked D. That was a typo. It should be A. If foreigners withdraw their money they will either reinvest it or, since that is not on the alternatives, they would buy goods from us. That is, our exports will rise. Sorry about that one.
There can be variations on answers on problems 14-17. I took these problems from a test bank from a text book different from the one I'm using now. So the issue is how to treat FA (does it include OR or not). So there can be two right answers for each of these. It doesn't look like there are any similar issues on the "real" test. Follow how we did it in class. Sorry for the confusion. I guess sample problems shouldn't be confusing but I don't have time to make up two tests, one sample and one "real" so the sample test are old questions from an old text. (And to cover my ass, I'm not really obligated to give you sample problems anyway.) Stick to how we did it on problem 2 on the homework.
I hope these are correct.
1-D, 2-C, 3-A, 4-D, 5-A, 6-D,
7-A, 8-C, 9-D, 10-C, 11-C, 12-A, 13-D,
14-D, 15-C, 16-C, 17-D, 18-B*,
19-A, 20-D**, 21-B, 22-D, 23-D, 24-B,
25-D, 26-D, 27-B***, 28-A****, 29-A.
*NS (or S) = Y - C - T, Y - T is often called "disposable income".
Problems 9 and 15 use the terminology capital account (KA). This is often used to refer to the Financial Account (FA). In both of these you should think of capital account as financial account.
Historical footnote: Until the national income accountants began referring to line 39 as the "Capital Account", economists generally referred to the "bottom part" of the BOP as the capital account and called it KA. In modern text books economists have adopted the terminology newly consistent with the national income accountants (FA: financial account). The problems 9 and 15 are historical outtakes.
I have checked the test document and I consistently use the terminology "financial account" or FA.
**This was originally marked C: Investement increases. Its the opposite, D: Investment decreases. This is crowding out. Thanks "LaUr.......".
***27 is B, not D as originally reported. It is negative public savings so it will decrease national savings. My bad.
****28 was originally marked D. That was a typo. It should be A. If foreigners withdraw their money they will either reinvest it or, since that is not on the alternatives, they would buy goods from us. That is, our exports will rise. Sorry about that one.
There can be variations on answers on problems 14-17. I took these problems from a test bank from a text book different from the one I'm using now. So the issue is how to treat FA (does it include OR or not). So there can be two right answers for each of these. It doesn't look like there are any similar issues on the "real" test. Follow how we did it in class. Sorry for the confusion. I guess sample problems shouldn't be confusing but I don't have time to make up two tests, one sample and one "real" so the sample test are old questions from an old text. (And to cover my ass, I'm not really obligated to give you sample problems anyway.) Stick to how we did it on problem 2 on the homework.
posted by Atomic Kid at 10:43 PM
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