1.Following are data on Country A's

(i) Gross Domestic Savings as a % of GDP and

(ii) Annual Growth Rate of GDP (in %).

Gross domestic savings (% of GDP) GDP grown (annual %)

2001 - 31 2001 - 4

2002 - 28 2002 - 4

2003 - 33 2003 - 5

2004 - 29 2004 - 5

2005 - 29 2005 - 6

(a) Calculate v, the estimated capital:output ratio for 2001 using the savings rate, s, and growth rate, g, using data for 2001. Assume that d, (the rate of depreciation of existing capital) is 5% and constant over all the years.

(b) Using this estimated ratio and the savings data for each of the following years: 2002 to 2005, calculate the predicted growth rate of GDP for each year from 2002 to 2005. Keep assuming that d = 5%. How well do the predicted growth rates match the actual growth rates?

(c) Now calculate v = the estimated capital: output ratio for each of the years 2002 to 2004. Then using the estimated value of v for 2002, and savings data for 2003, calculate the predicted growth rate of GDP for 2003; then using the estimated value of v for 2003, and savings data for 2004 calculate the predicted growth rate for 2004 and so on.

Which ofthe following is correct MM propostion in a world oftaxes is based on the assumption that corporate taxes are lower than personal taxes MM proposition in a Iworld of taxes is based on the assumption that corporate taxes are equal to personal taxes When both corporate and personal taxes are considered. the value of the firm initially declines with debt and then starts to increase. When both personal and corporate taxes are considered.debt nancing no longer increases the value of the rm When both personal and corporate taxes are considered. debt financing still increases rm value but to a lesser extent compared to when personal taxes are zero Which ofthe following is correct MM propostion in a world oftaxes is based on the assumption that corporate taxes are lower than personal taxes MM proposition in a world of taxes is based on the assumption that corporate taxes are equal to personal taxes When both corporate and personal taxes are considered. the value of the firm initially.I declines with de ht a n :21 then sta rts to increase. When both personal and corporate taxes are conside red.debt nancing no longer increases the value ofthe n'n When both personal and corporate taxes are considered. debt financing still increases rm value but to a lesser extent corn pared to when personal taxes are zero Question 39 Not yet answered Marked out of 1.00 P Flag question "To provide better guidelines on standard cost accounting practices", is one of the objectives of a manufacturing firm that can be achieved through O a. Cost Accounting Standards O b. Generally Accepted Accounting Principles O . Charted Accounting Institute Standards O d. International Financial Reporting StandardsDuestlon 2 [I13 points] The drop in housing values has a wealth effect that most directly affects which component of aggregate deman d\"? Question 2 options: - Government Purchases - Investment _ I w Duestlon 3 {I13 points] The drop in nevir housing construction most directly.r affects which component of aggregate demand? Question 3 options: - Government Purchases