Test D – Question 12
### A firm with a fixed factor of production and a variable factor of production – **What is marginal product?** – The “marginal product” of workers is the amount of products added as a result of hiring the last worker, from a continuous set of workers that begins with the first worker and ends with […]
Test A – Question 6
The economy’s foreign exchange reserves increased. State two possible reasons for the increase in foreign exchange reserves. Show how the increase in foreign exchange reserves, as a result of one of the reasons you mentioned, would be reflected in a balance of payments diagram. answer: The economy’s foreign exchange reserves can increase (among other things) […]
Test C – Question 3
Last year, the rate of increase in the consumer price index amounted to 0%. Since the index did not increase at all, the Bank of Israel decided to lower the interest rate in the economy. Explain what the consumer price index is, and state one method for calculating the index. State two economic effects that […]
Test A – Question 12
In the agreement signed between the Histadrut and the employers, it was decided that the cost of living increase rate will now be only 10% of the rate of increase in the index. Explain what a cost increase is. How will implementing this decision affect the worker’s nominal wage and his real wage ? Justify […]
Test B – Question 2
Assume that the central bank is considering raising the required reserve ratio of commercial banks from 10% to 20%. Explain what a “required reserve ratio” is, and state one reason for raising it. Explain and demonstrate, using a numerical example, the effect of raising the required reserve ratio on the consolidated balance sheet of commercial […]
Test A – Question 3
The sharp devaluation of the shekel exchange rate contributed to the acceleration of inflation. Show and explain, using the supply and demand curves of the foreign exchange market, how public expectations of depreciation affect the exchange rate. Assume a free market for foreign exchange. Present, with the help of a numerical example, a complete diagram […]
Test A – Question 5
There is a proposal to lower the maximum marginal income tax rate from 50% to 40%. Explain what a marginal tax is. Show and explain, using the Lorenz curve, how a reduction in the marginal income tax rate will affect inequality in the distribution of income in the economy. answer: Section A: The marginal income […]
Test A – Question 11
The economic slowdown caused a decrease in government tax revenues, and consequently an increase in the domestic national debt. What is internal national debt? Using a complete diagram of the government budget, show the effect of the decline in tax revenue on the increase in the domestic national debt. answer: Section A : The “domestic […]
Test C – Question 1
In 2000, there was a significant decrease in the number of tourists arriving in Israel, and following this, a wave of layoffs began in the tourism industry. Assume that in the initial state the economy is in unemployment . Show and explain, using a revenue curve, the change that will occur in the composition of […]