Key to sample problems for test 3

The sample problems are available on the I-drive. Please note that if you downloaded it before 1:50 p.m. on Tuesday, there were a few changes in wording on some problems.

Cautionary note: Although in class it was mentioned that there are two types of bank reserves, required and excess, in our examples we did not distinguish between the two. That distinction becomes important in the next chapter. So a few of the problems use this terminology "required" and "excess". I do not plan to ask any questions which make use of this difference. Just know that there is a difference at this point.

Two other notes: When discussing "productivity", the L is considered Labor. Our use in class has been that Labor was a "person". But it can also mean "unit of worker effort", meaning like "an hour of labor". That comes into play on 31 and 33. The distinction is merely technical, but does not alter our understanding.

Here is the key. Please IM me or email me if you think there are any errors. I'll be able to post updates on this weblog.

1-C, 2-D, 3-B*, 4-D, 5-A,
6-C**, 7-C, 8-C, 9-A, 10-A,
11-B, 12-A, 13-D, 14-A, 15-B, 16-B,
17-C, 18-C, 19-C, 20-A, 21-C, 22-C,
23-D, 24-A, 25-D, 26-B, 27-B,
28-B, 29-D, 30-D, 31-C, 32-A, 33-A,
34-B, 35-D, 36-A, 37-B, 38-A, 39-D,
40-C, 41-C, 42-B, 43-C, 44-A

*B and C look very similar. But B is the best because it fits the definition of GDP (C uses the definition of GNP)

**sorry for the repeat.

Also, sorry for all the inflation calculation questions. As I say, these are from previous tests. I want to focus the discussion of CPI not so much as how to calculate one or calculate an inflation rate, but how the CPI aims (and fails) to capture measure of the price level.

Watch this site for updates.