ECON 4000    

October 15, 1992

1.    The president of our university is ___________________________.

2.    The IS and LM curves were first drawn by _____________________.

Answer four (4) of the following.

1.    What are the policy implications of the classical model?  What are the key assumptions in arriving at these implications/conclusions?

2.    What is the keynesian model of income determination.  Explain and illustrate this model as appropriate.

3.    What kind of equlibrium is shown by the IS and LM curves?  Does this model have an advantage (disadvantage) over the classical model?

4.    Distinquish between the concepts of wealth, income, capital, gross (net) investment saving, and human capital.

5.    If    S = -210 + 0.2Y   and

             I = 190 - 10i       and

             at equilibrium   S = I

             Solve for equilibrium in terms of Y and then in terms of i.

             If LP =  Liquidity preference = 0.2Y + 200 -  20i and

                          M    =   300

                         at equilibrium  LP =  M

              Solve for equilibrium in terms of Y and then in terms of i.

       Taking the appropriate equation from each part above what is the equilibrium income level.  Taking the appropriate equation from each part above what is the equilibrium level of interest values.

6.    Compare and contrast the Keynesian and classical theory of interest.