econ110 compulsory questions (1 Viewer)

[~ForAGoodCause~]

i know ay,
its like they're havin wet dreams over econ .... dam actuaries

 

[-=«MÄLÅÇhïtÊ»=-]

i fink if u have proper reasoning u'll get the marks.

isaac's studied a yr of uni and knows how a bond operates, so given the context of the real world, his view is correct. On the other hand, econ110 is a basic course, so mein's, dwh2427's and friend's long term argument that u wait for self fullfilling prophecy to happen is also arguable...however in this case...i think he needs to read the question properly.

Question says "European central banks will lower interest rates", this means european cb controls the interest rate. Which means interest rate is exogenous. Self fullfilling prophecy is governed by market forces and it aint gonna happen if CB controls R.
In simple words, its not gonna happen unless CB wants it to.


edit:

even if R wasnt exogenous, i'd still go wiv isaac's argument though. u might wanna check out tutorial 4, i think its similar in some aspects:

Use diagrams to illustrate the effect of the following on the investment demand
curve and the equilibrium rate of investment:
i) A decrease in the rate of interest.
ii) A general expectation of lower returns from the production and sale of
iii) An unexpected decrease in the price of capital goods.
iv) A general expectation that capital goods will fall in price next year.

edit2:
ive deleted the flaming from earlier to save some embarassment due to the sudden change of events...

 

[RIZAL]

"Question says "European central banks will lower interest rates", this means european cb controls the interest rate. Which means interest rate is exogenous. Self fullfilling prophecy is governed by market forces and it aint gonna happen if CB controls R.
In simple words, its not gonna happen unless CB wants it to."

exactly. now I've fully made up my mind what I am going to write.

AND....if you stuff up the logic in the first bit, you might lose 4 marks. I'm guessing you'd still get 16 for the rest.

ps: haven't checked the forum in like 5 days, and I missed out on getting flamed?? What were ppl sayin? and how come no one is SHARING their m/c answers for the past exams?

 

[radiohead]

i did 2001 paper:
1B
2D
3A
4C
5B
6D
7D
8A
9C
10B
11A
12A
13D
14D
15D
16D
17A
18B
19A
20C
21B
22B
23B
24C

 

[-=«MÄLÅÇhïtÊ»=-]

Originally posted by Isaaq
and how come no one is SHARING their m/c answers for the past exams?

dint know how to break it to ya man....but they were all wrong..everyone of them..xcept the one u didnt do..but i think that counts as a wrong too in exam =/

 

[ND]

Isaac, check out these links:

http://quote.bloomberg.com/apps/news?pid=10001081&sid=ayihzxF3y5j4&refer=benchmark_currency_rates

http://quote.bloomberg.com/apps/news?pid=10001097&sid=a8YgL4EvSD4g&refer=world_currencies

I know they're real world and all, but still...

I was gonna do it our original way, but now i'm not so sure...

 

[Mein]

Isaac I got fairly similar answers to you for the 2003 past paper

1. B
2. C
3. C
4. D
5. B
6. D
7. A
8. C
9. D
10. A
11. B
12. B
13. C
14. C
15. A
16. B
17. D
18. B
19. A
20. A
21. C
22. A
23. D
24. Don't know

I wasn't 100% about question 2 but a classmate got the same. With 22 I'm pretty positive its A, and with 23, I'm not really sure what to pick. A or D, it could be either really I think.

 

[-=«MÄLÅÇhïtÊ»=-]

2)A, actual is always actual (thought it was C b4, dats wen planned=planned ><")

22) cant be stuffed digging out the formulae

23) think its D because for A, lowering taxes doesnt do much for Uf and Us.

24)B, juz apply simplified formula

Originally posted by ND
Isaac, check out these links:

http://quote.bloomberg.com/apps/news?pid=10001081&sid=ayihzxF3y5j4&refer=benchmark_currency_rates

http://quote.bloomberg.com/apps/news?pid=10001097&sid=a8YgL4EvSD4g&refer=world_currencies

I know they're real world and all, but still...

I was gonna do it our original way, but now i'm not so sure...

ye dats really gayed things up hasnt it...

 

[~ForAGoodCause~]

the question about expected interest rates doesnt matter, cos its not gonna be in it i tells ya!
its gonna be unemployment

 

[Orange Juice]

can someone teach me how to do q4 in 2003 paper plz....
i keep getting huge ass answers

 

[-=«MÄLÅÇhïtÊ»=-]

S=Y-C-T
simplify it, note that u arent told what m is so assume its 0
S=-C0-T0+bT0+(1-b+bt-t)Y

Only component of that thats gonna change is (1-b+bt-t)Y.

Use ur equilibrium Y equation to work out change in Y (with X=80 and X=0), and your answer is -200.

(1-b+bt-t)deltaY=.2*-200=-40
So it falls by 40. answer is D

 

[flamin']

2003 Paper:
MEIN: most my answers same as yours except this:

1) D

Positive economic statements = truth fact, predictions aren't always truth/fact

2) A

Actual J = Actual L always holds - check your text book

Planned J = Planned L holds ONLY at equilibrium

20) C

Rise in inflation decreases nominal, decreases real values

 

[-=«MÄLÅÇhïtÊ»=-]

um wiv Q2 preexam...im still gonna stick wiv isaac and flamin's view. given the stuff we've been taught its still flawless.
dont fink it matters which way u choose as long as u explain it. wiv our view its a very short term point of view, which is exploiting almost arbitrage like situation in economy, as soon as the expectation occurs, capital flows gonna go back in opposite direction. The other way is juz abit more short-medium term.


edit:

aiight to counter those 2 articles: firstly they're both real world, so im simplifying my arguments abit

first article, the rate rise is to slow down inflation. the increase in kinflow could be due to increase business confidence.
from a static point of view, if ppl search the world for highest rates, rates in Aus are higher than US, yet y do ppl invest in US? diff betwene real world and our txtbook concepts.

2nd article, irrelevant, since it says rates have already risen. so its not an expectation.

 

[flamin']

The top bit is worth 4 marks - you get the directions wrong who gives a shit...

They can't penalise you for the adjustment process in the next bit if you did it right just coz you got the initial two directions wrong

 

[Mein]

Ok thanks Flamin'

I was a bit iffy for question 1 and 2, and misread q 20

 

[william]

For 5 pre-exam lists , the third one. Who are your answers for the last part... three years later, the economy starts to grow strongly but inflation remains at low levels.....?

 

[-=«MÄLÅÇhïtÊ»=-]

Y increases, so fY increases, upward pressure on R, CB wants to maintain R at Rbar, so CB buys GS to increase Ms. No MP action since inflation is low.

This is basically what Di Zheng said in webct.

 

[Mein]

Can anyone help me with Q5 parts i) and ii) of the Okun's law question.

Basically my description of Okun's law was straight from the book. But I dunno how to answer i) and ii)

I know how your meant to solve i) and ii) ie:

i) U. = (1 – U) / U x (α. + NLF. – Y.)
ii) (U. - 0.01) = (1 – U) / U x (α. + NLF. – Y.)

But how do you explain or 'show' how Okun's law equates the answer.

Any help would be appreciated. Cheers!

 

[Mein]

I must say  is an upward arrow.

 

[Mein]

Ok I think I understand how to explain it. Any suggestions are still welcome.