ECO 3302 SMU FINAL QUESTIONS WITH CORRECT ANSWERS

Consumption Expenditures (C): $850 billion
Government Expenditures (G): $400 billion
Investment Expenditures (I): $250 billion
Exports (X): $50 billion
Imports (M): $75 billion
Depreciation: $50 billion


Gross Domestic Product (GDP) is equal to ----- and Net Domestic Product (NDP) is
equal to-----


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, $1475 billion; $1425 billion




An increase in consumer confidence when the SRAS curve is toward sloping:


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leads to an increase in both the price level and real GDP




Inflation occurs when


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the average price level rises




The IS equation shows all combinations of income and interest rates consistent with --
----- market equilibrium, while the LM equation shows all the combinations of income
and interest rates consistent with ------ market equilibrium


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product ; money




Assume the per worker production function is y=k^1/2, depreciation is 4% of capital,
the labor force grows at 2%, and the savings rate is 30%. Then, the steady state
equilibrium is achieved when capital per worker is equal to: