The table below shows the production of tons of Sugar and Bananas by Barbados and Jamaica using the same quantities of resources.

economics

Description

Instructions

1.     Answer all questions in both Sections of this paper

2.     The answers to each question in Section B must be type-written below each question or part thereof.

SECTION B (30 MARKS)

INSTRUCTION: Do all questions in this Section

51)   (Total = 8 marks)

(A)          Fill in the empty cells in the below:                            (4 marks)

 January February Labor Force 140,000 142,000 Employed 130,000 131,000 Unemployed Unemployment Rate %

(B)       Given the Consumption Function, suppose a = 50, c = 0.8, and T = 410. How                                much is saved out of a total gross income of 1230?                           (4 marks)

52)       (Total = 8 marks)

Refer to the information provided in Table 9.3 below to answer the questions that            follow.

Table 9.3

All Numbers are in \$ Million

(A)       Assuming constant MPC, at income of \$1,100 million, what is consumption?

(2 marks)

(B)       Assuming constant MPC, at income of \$1,400 million, what is consumption?

(2 marks)

(C)       Assuming constant MPC, at income of \$1,300 million, what is savings?

(2 marks)

(D)       Assuming constant MPC, at income of \$1,500 million, what is savings?

(2 marks)

53)       (Total = 8 marks)

The table below shows the production of tons of Sugar and Bananas by Barbados and Jamaica using the same quantities of resources.

 Tons of Sugar Tons of Bananas Barbados 220 80 Jamaica 130 150

 Tons of Sugar Tons of Bananas Barbados Jamaica

(A)       Who has the Absolute Advantage in the production of Sugar, and why?

(2 marks)

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(B)       Who has the Absolute Advantage in the production of Bananas, and why?

(2 marks)

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(C)       Who has the Comparative Advantage in the production of Sugar, and why?

2 marks)

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(D)       Who has the Comparative Advantage in the production of Bananas, and why?

(2 marks)

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54.       (Total =14 marks)

Assume the following equations for a macroeconomy

C = 150 + .8Yd , I = 40, T = 0.2Y , X=120, Im=0.2Y  and G = 350.

(A)       Calculate the equilibrium level of output                                           (5 marks)

(B)       Calculate Net exports, and total consumption.                                   (3marks)

(C)       Calculate total consumption                                                               (3 marks)

(D)       State whether the economy has a budget surplus/deficit. Find its value.

(3 marks)

55.       (Total = 6 marks)

The table below represents the demand and supply schedules for cement in Canada and

United States. (Assume these are only 2 countries trading in cement).

(A)       If there is no trade between these two countries, what are the equilibrium price                              and the equilibrium quantity in Canada?                                            (2 marks)

(B)       If there is no trade between these countries, what are the equilibrium price and the

equilibrium quantity in the United States?                                         (2 marks)

(C)       If Canada and the United States trade with each other, what will be the                                         equilibrium price in the world for cement?                                         (2 marks)

56)       (Total = 6 marks)

A nation’s foreign transactions are as follows:

Refer to the above table to answer the following:

(A)       What is this nation’s balance of trade?                                   (2 marks)

(B)       Calculate the current account balance.                                   (2 marks)

(C)       Calculate the capital account balance.                                    (2 marks)

END OF EXAMINATION