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)

                        __________________________________________________________

                        __________________________________________________________

                        __________________________________________________________

                        __________________________________________________________

                        __________________________________________________________

           

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

                                                                                                                                     (2 marks)

                        __________________________________________________________

                        __________________________________________________________

                        __________________________________________________________

                        __________________________________________________________

                        __________________________________________________________

 

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

                                                                                                                                    2 marks)

                        __________________________________________________________

                        __________________________________________________________

                        __________________________________________________________

                        __________________________________________________________

                        __________________________________________________________

 

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

                                                                                                                                    (2 marks)

                        __________________________________________________________

                        __________________________________________________________

                        __________________________________________________________

                        __________________________________________________________

 

 

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.

                        ( Correct your answers to 2 decimal places)

 

            (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

 


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