ECO102

SPRING 2020
MIDTERM -1(ASSIGNMENT)

MARKS: 50
TIME: 180 MINUTES.
1. What is GDP.? What are the two approaches of calculating GDP? Name them.
2. If net exports are negative , why is the country in deficit and rest of the world in surplus?
3. How is government expenditure different from transfer payments?

4. Why is financial assets not considered as part of GDP? Explain.

5. How can one use Labor force participation rate to comment about labor market?
6. What is the difference between frictional and cyclical unemployment?
7. If there is change in capital , will the potential GDP change or the real GDP change? Explain with the help of
a graph.
8. When money wage decreases, and potential GDP remains the same , what happens to short run aggregate
supply? Use graph to explain your answer.
9. When price level increases, RGDP decreases due to substitution effect. Explain.

10. How does monetary and fiscal policy affects the aggregate demand. Use graph to explain your answer,