ECON 201: Introduction to Macroeconomics Final Exam December 13, 2012 NAME:

Size: px
Start display at page:

Download "ECON 201: Introduction to Macroeconomics Final Exam December 13, 2012 NAME:"

Transcription

1 ECON 201: Introduction to Macroeconomics Final Exam December 13, 2012 NAME: Circle your TA s name: Amy Thiago Samir Circle your section time: 9 a.m. 3 p.m. INSTRUCTIONS: 1) The exam lasts 2 hours. 2) The exam is worth 120 points in total: 45 points for the multiple choice questions (Part A), and 75 points for the analytical problems (Part B). 3) Write your answers for part A (the multiple choice section) in the blanks below. You won t get credit for circled answers in the multiple choice section. There is no penalty to guessing, so be sure to answer all of them. 4) Place all of your answers for part B in the space provided. 5) You must show your work for part B questions. There is no need to explain your answers for the multiple choice questions. 6) Calculators are permitted. Books, notes, reference materials, etc. are prohibited. 7) Good luck! PART A MULTIPLE CHOICE QUESTIONS Answer multiple choice questions in the space provided below. PLEASE USE CAPITAL LETTERS Page 1

2 1. Fiscal policy refers to: A) the control of interest rates. B) the control of government spending and taxation. C) the control of the quantity of money. D) the control of interest rates and of government spending. 2. The trough of the business cycle: A) comes right after the expansion phase. B) comes before the recession phase. C) is a temporary maximum level of real GDP. D) is a temporary minimum level of real GDP. 3. A laptop computer that is purchased by an accounting firm is considered to be: A) consumption spending. B) investment spending. C) private saving. D) a pretax dividend. 4. The main point about the article concerning young adults living at home with their parents was A) When kids move out consumer spending increases B) When kids move out consumer spending decreases C) When kids live at home parents save more money D) When kids live at home parents save less money 5. An intermediate good would be: A) a new boat purchased by a professor to be used on vacation. B) lumber used to build a house. C) payments to military personnel. D) a professor's salary. 6. The Boeing Company buys $3 million worth of steel, $2.5 million worth of computer hardware and software, and $1 million worth of mechanical tools to manufacture a certain model of aircraft. Boeing sells this particular model of aircraft at $10 million. The value added by Boeing is equal to: A) $3.5 million. B) $16.5 million. C) $13 million. D) $15.5 million. 7. Don has built an expansion to his house. The value added by this action will: A) not be included in GDP because it is not produced for the marketplace. B) be included in GDP because Don is a professional builder. C) not be included in GDP because it is an intermediate good. D) be included in GDP because building is Don's hobby. Page 2

3 8. Some people work part-time when they would prefer to have full-time jobs. These people are A) Counted as unemployed and in the labor force B) Counted as unemployed and out of the labor force C) Not counted as unemployed and in the labor force D) Not counted as unemployed and out of the labor force 9. If real GDP rises while nominal GDP falls, then prices on average have: A) risen. B) fallen. C) stayed the same. D) Real GDP cannot rise when nominal GDP falls. 10. Suppose that a country has a progressive income tax code, where taxable income is calculated in nominal terms but the schedule of income tax rates is NOT indexed to inflation. An individual whose income keeps up with inflation will find that over time he or she will pay: A) the alternative minimum tax. B) a lower percentage of income in taxes over time. C) the same percentage of income in taxes over time. D) a higher percentage of income in taxes over time. Use the following graph to answer question 11: Figure: The Labor Market 11. (Figure: The Labor Market) Refer to the accompanying figure on the labor market. What is the unemployment rate at an efficiency wage of $16? A) 10% B) 20% C) 27% D) 73% Page 3

4 12. The long-term unemployed, those out of work a year or more, tend to be particularly common among A) With a high school education or less B) Aged 65 and over C) With a college education D) Aged 25 and under E) A) and B) F) A) and D) 13. If a country has a working-age population of 200 million, 135 million people with jobs, 10 million people who were looking for a job but have given up, and 5 million people unemployed and seeking employment, then the number of unemployed workers is: A) 25 million B) 15 million C) 10 million D) 5 million 14. In a particular labor market, the demand for labor is given by W = 20 (1/100)L and the supply of labor is given by W = 4 + (1/100)L where W is the wage rate, and L is the number of workers. These equations imply the market equilibrium without any government intervention. Suppose the government decides to impose a minimum wage of $15 in this market. What effect will this minimum wage have on the original market equilibrium? A) The minimum wage will have no impact since it is below the equilibrium wage. B) The minimum wage will create a shortage of workers since it is above the equilibrium wage. C) The minimum wage will create surplus of workers since it is above the equilibrium wage. D) The minimum wage will increase the wage only for workers who were employed at the original equilibrium. 15. If output is growing at 5% annually, how many years will it take for output to reach 4 times its original level? A) 14 years B) 10 years C) 20 years D) 28 years 16. Why is Germany cited as a country that avoids the negative effects of long-term unemployment? A) Government-financed health care B) Work sharing C) Government promotion of German exports D) More generous unemployment benefits Page 4

5 17. Real GDP per capita, growing at a constant rate over a 35-year period, doubles in size at the end of that period. What must the annual growth rate of real GDP per capita be for this economy? A) 1% B) 2% C) 4% D) 15% 18. According to the rule of 70, if a country's real GDP per capita grows at an annual rate of 2% instead of 3%, it will take for that country to double its level of real GDP per capita. A) 35 additional years B) additional years C) 23.3 additional years D) 30 additional years Use the following graph to answer question 19: Figure: Technological Progress and Productivity Growth 19. (Figure: Technological Progress and Productivity Growth) Which of the following changes in real GDP would be most likely to result over time from the deterioration of the nation's infrastructure? A) A to B B) B to C C) C to B D) B to A Page 5

6 20. A crucial difference in the historical development of the United States as compared to Argentina is A) More immigration in the U. S. than in Argentina B) More immigration in Argentina than in the U. S. C) Land holdings were larger in the U. S. than in Argentina D) Land holdings were larger in Argentina than in the U. S. 21. If in an open economy, a country imports more than it exports and the government budget deficit increases: A) interest rates will increase and the amount of borrowing will increase. B) interest rates will decrease and the amount of borrowing will increase. C) interest rates will increase, but the change in borrowing is ambiguous. D) the change in interest rates is ambiguous, but the amount of borrowing will increase. 22. In a closed economy government spending was $30 billion, consumption was $70 billion, taxes were $20 billion, and GDP was $110 billion this year. There were no transfers. Investment spending was $10 billion. As a result: A) private savings were equal to $10 billion. B) the government's budget balance was equal to a surplus of $10 billion. C) net savings were equal to $0. D) private savings were equal to $20 billion. 23. A shift away from taxing asset income and toward taxing consumption would lead to: A) a larger demand for loanable funds, a higher interest rate, and slower economic growth. B) a larger supply of loanable funds, a lower interest rate, and faster economic growth. C) a larger government budget deficit and slower economic growth. D) a smaller supply of loanable funds, a higher interest rate, and faster economic growth. Use the following table to answer question 24: Table: Investment Projects Page 6

7 24. (Table: Investment Projects) If the market interest rate declines from 15% to 11%, then the amount of investment demanded will increase by: A) $200. B) $1,000. C) $2,000. D) $2, Autonomous consumption depends positively on A) Household assets B) Household liabilities C) Interest rates D) Optimism of business firms Use the following graph to answer question 26: Figure: The Market for Loanable Funds 26. The diagram above represents the market for loanable funds when the government is running a budget balance of zero. The economy is closed. When the government decides to increase defense spending by $200 billion and then finances the spending by selling bonds, the equilibrium interest rate will: A) fall to 12%. B) rise to 16.5%. C) rise to 18%. D) rise to 21%. Page 7

8 27. Suppose that the marginal propensity to consume is 0.8, and investment spending increases by $100 billion. The increase in aggregate demand is: A) $500 billion, the same amount as investment spending. B) $125 billion, composed of $100 billion in investment spending and $25 billion in consumption. C) $80 billion, composed of $100 billion in investment spending and a decrease in consumption of $20 billion. D) $500 billion, composed of $100 billion in investment spending and $400 billion in consumption. 28. When Julie Ann's disposable income is $10,000, she spends $10,000, and when her disposable income is $15,000, her spending is $12,500. Julie Ann's autonomous consumption is and her. A) $5,000; MPC = 0.5 B) $10,000; MPS = 0.5 C) $0; MPC = 0.5 D) $0; MPS = The fiscal cliff most closely resembles A) Infrastructure spending in China B) The Obama stimulus C) Austerity in Europe D) Tax holiday for repatriating foreign earnings Use the following graph to answer question 30: 30. (Figure: Aggregate Expenditures Curve) Suppose that the consumption function shifts upward by $100. The result would be an increase in the equilibrium level of real GDP of: A) $100. B) $400. C) $800. D) $3,200. Page 8

9 Use the following graph to answer question 31: Figure: AD AS Model 31. (Figure: AD AS Model) If the economy is at point X, which of the following describes the likely adjustment to long-run equilibrium? A) Nominal wages fall, and the aggregate demand curve shifts left until the economy reaches long-run equilibrium. B) Nominal wages rise, and the aggregate demand curve shifts right until the economy reaches long-run equilibrium. C) Nominal wages fall, and the short-run aggregate supply curve shifts right until the economy reaches long-run equilibrium. D) Nominal wages fall, and the short-run aggregate supply curve shifts left until the economy reaches long-run equilibrium. 32. A key blunder on the way to the crisis was A) An increase in leverage from 12 to 33 B) A decrease in leverage from 33 to 12 C) An increase in the required reserve ratio from 10 to 20 D) A decrease in the required reserve ratio from 20 to 10 Page 9

10 Use the following to answer questions 33-34: Figure: Policy Alternatives 33. (Figure: Policy Alternatives) In panel (b), the economy is initially in short-run equilibrium at real GDP level Y1 and price level P2. If the government decides to intervene, it would most likely: A) increase taxes. B) decrease the quantity of money available. C) increase the level of government purchases of goods and services. D) decrease the level of government purchases of goods and services. 34. (Figure: Policy Alternatives) If the economy is in equilibrium at Y1 in panel (a), it is experiencing A) a recessionary gap B) an inflationary gap. C) long-run equilibrium but not short-run equilibrium. D) full employment. 35. Suppose the government increases spending more than is necessary to close a recessionary gap. Which of the following is likely to result? A) The economy will experience inflation. B) The price level will decline. C) The economy will experience a stagflation. D) The equilibrium real GDP will fall short of potential GDP. 36. If the marginal propensity to consume is 0.9, then the tax multiplier will be: A) impossible to determine. B) greater than 10. C) less than 10. D) zero, because there is no multiplier effect from taxes. Page 10

11 37. Which of the following is a key ingredient in a bubble A) Household assets rise faster than household liabilities B) Household liabilities rise faster than household assets C) Skeptics are in the minority D) Skeptics are in the majority 38. Suppose an economy is producing real GDP of $300 billion. The potential output is equal to $400 billion, and the MPC is equal to Then the government should follow a policy of: A) raising taxes by $25 billion to bring the economy to potential output. B) cutting taxes by $33.33 billion to bring the economy to potential output. C) raising taxes by $33.33 billion to bring the economy to potential output. D) cutting taxes by $25 billion to bring the economy to potential output. 39. If a bank has assets equal to $100 million dollars, according to practice, its liabilities should NOT exceed: A) $7 million. B) $70million. C) $93 million. D) $107 million. 40. Suppose Ronny decides to withdraw all of the cash out of his checking account and open a single time deposit account at the same bank. As a result of this transaction: A) M2 falls but M1 remains unchanged. B) M1 and M2 both fall. C) M1 and M2 both remain unchanged. D) M1 falls but M2 remains unchanged. 41. Suppose you find a $50 bill that you put in a coat pocket last winter. If you deposit it in your checking account: A) M1 increases by $50. B) M2 increases by $50. C) M1 and M2 both increase by $50. D) there is no change in M1 or M When troubled financial institutions are forced to sell assets quickly at a deep discount, this is a(n): A) debt overhang. B) vicious cycle of deleveraging. C) maturity transformation. D) asset bubble. 43. A sudden and widespread disruption of financial markets that occurs when people lose faith in the liquidity of financial institutions and markets is a(n): A) asset bubble. B) maturity transformation. C) financial panic. D) debt overhang. Page 11

12 44. When shadow banks engage in maturity transformation, they raise funds by and invest in. A) issuing stock; stock of other companies B) selling bonds; Treasury bills C) borrowing in short-term credit markets; longer-term speculative investments D) borrowing in long-term credit markets; short-term speculative investments 45. Which of the following is not cited as a reason that monetary policy has failed to produce a robust recovery? A) Many households are under water with their mortgages B) Business firms won t invest because of weak consumer demand C) Banks lack sufficient excess reserves to make loans D) Business uncertainty about new medical care and financial reform legislation Page 12

13 Answer Key 1. B, 2. D 3. B 4. A 5. B 6. A 7. A 8. C 9. B 10. D 11. C 12. E 13. D 14. C 15. D 16. B 17. B 18. B 19. D 20. D 21. D 22. D 23. B 24. D 25. A 26. C 27. D 28. A 29. C 30. B 31. C 32. A 33. C 34. A 35. A 36. C 37. C 38. D 39. C 40. D 41. D 42. B 43. C 44. C 45. C Page 13

14 PART B SHORT ANSWER PROBLEM 1: (12 points, 1 point per blank) Complete the blanks using the following table. Round all values to the nearest two decimal places, including percentages. That is, answers should look like 13, or 29.87% Annual Price Quantity Price Quantity Percentage Change Between Guns using Roses the LN formula Nominal GDP % Real GDP in 2011 prices Real GDP in 2012 prices GDP Deflator with base year 2011 GDP Deflator with base year % % What is the growth rate in chain-weighted GDP? 29.12%_ Page 14

15 PROBLEM 2: (14 points) Solve this problem using the LN formulas shown in class. We will not accept solutions that involve other methods. At the beginning of 2012, Jungleland s GDP is It grows at a constant annual rate of 8%. A) (3 points) How long will it take for Jungleland s GDP to increase by 50%? Ln(1.5)=0.08s s=5.07 B) (3 points) At the beginning of 2012, Hogwarts GDP is 800, and it is growing at a constant annual rate of 12%. When will Hogwarts catch up with Jungleland? Ln(1000)+0.08s=ln(800)+0.12s 0.04s=ln(1.25) s=5.58 C) (3 points) Jungleland s population is not happy that, eventually, Hogwarts is going to have higher GDP than their country. They are going to work harder to ensure that Hogwarts will never catch up with Jungleland. If Jungleland s new growth rate is constant every year, what is the minimum growth rate that ensures that Jungleland will always have a higher GDP than Hogwarts? 12% D) (5 points) Sportsland s ambition is to host the Olympic Games. At the beginning of 2012, its GDP was 1,500 and it was growing at 15% a year. Moreover, it will keep this pace until it holds the Olympic Games. In order to host such a big event, Sportsland s GDP must be at least 6,000. After the moment it reaches that GDP level, it will hold the Olympic Games in the beginning of the next year available for the event (remember that the Olympic Games take place every four years, in the years: 2012, 2016, 2020, etc.) During the year that Sportsland hosts the Olympic Games, their GDP will grow at 75%. Then, everything returns to normal, and their GDP will keep growing at 15% a year forever onwards. When will Sportsland s GDP reach 25,000? When will the GDP reach 6000? Ln(1500)+0.15s=ln(6000) after s=9.24 years So, they will host the Games after 12 years. More precisely, they will hold the Games in the beginning of GDP in the beginning of 2024 = 1500*exp(0.15*12)= GDP in the beginning of 2025 = *exp(0.75)= Ln(25000)=ln( )+0.15s s=1.76 So they will reach during the year 2026 Page 15

16 PROBLEM 3: (12 points) Throughout the question, assume that if disposable income in South Korea is 1000, then, aggregate consumption is 1020, and if disposable income is 100, then aggregate consumption is 570. A) (2 points) What is the autonomous consumption and the MPC of South Korea? A = 520 and MPC = 0.5 B) (2 points) In 2007, the additional elements that enable us to calculate the South Korean GDP are: private investment Ip = 400, government expenditure G = 340, exports X = 280, imports IM = 340, taxes are 600 and transfers to households are 200. The GDP is (2000) C) (2 points) In 2008 the United States was hit by a financial crisis. In that year, Americans were so scared that they cut spending on imported goods from South Korea. More precisely, suppose that exports declined by 80 in 2008 in comparison to If the only change from 2007 to 2008 was the change in exports, what is South Korean GDP in 2008? (1840) D) (3 points) The federal government was monitoring the crisis and decided to take initiative to avoid the outcome of the question above. After exports decreased, it decided to decrease interest rates in order to increase investment expenditure. What is the necessary level of such expenditure needed to bring the economy back to the 2007 GDP level? (80) E) (3 points) Suppose that instead of decreasing interest rates, the government decided to increase the transfers to the households. What is the necessary level of such transfers needed to bring the economy back to the 2007 GDP level?.(160) Page 16

17 PROBLEM 4: (8 points, 2 points per part) Following a sudden shakeup at the Fed, an open market sale of securities worth USD 2 billion occurs. The required reserve ratio is always 5 percent and people tend to hold 20 percent of their deposits in the form of currency. A) What is the change in dollar deposits? -8 billion USD B) What is the change in bank reserves? -400 million USD C) Find the money multiplier. 4.8 D) What is the change in money supply? -9.6 billion Page 17

18 PROBLEM 5: (12 points) The below table shows employment statistics on the population of Sherwood in Age Have a job and not looking for another one Have a job but looking for another job Don t have a job but are looking for one Don t have a job and are not looking for one Total < > Total A) (1 point) How many people are in the labor force in 2010? B) (1 point) How many people are unemployed in 2010? 4540 C) (1 point) How many people are employed in 2010? D) (2 points) What is the labor force participation rate in 2010? 58.91% (1pt for correct working age pop but incorrect final ans) E) (1 point) What is the unemployment rate in 2010? 17.13% F) (2 point) The youth unemployment rate is the unemployment rate among year olds. What is the youth unemployment rate? 32.94% G) (2 point) In 2012 the labor force of Sherwood consists of 45,000 people and the unemployment rate is 8%. How many people were employed in 2012? H) (2 point) What was the average annual growth rate in the number of people employed between 2010 and 2012? (Use the LN formulas shown in class) 31.68% Page 18

19 PROBLEM 6: (9 points) Table: National accounts of Solaris, 2011 GDP $260.2b Government spending $75.4b Taxes $97.2b Transfers $25.1b Private saving $40.9b Net capital inflow $27.0b Exports $13.2b A) (2 points) What was the government budget balance in 2011? S G =T-G-TR = =-$3.3b B) (1 point) What was the value of national savings in 2011? S N = S G + S P = =$37.6b C) (2 points) What was consumption in 2011? S P =Y+TR-T-C C= Y+TR-T-S P C= C=$147.2b D) (1 point) What was investment in 2011? I= S N -NCI = =$64.60 E) (1 point) What were imports in 2011? NCI=IM-X IM=NCI+X IM= =$40.2 F) (2 points) As at 31 st December 2010 the government debt in Solaris was $22.8b. What was the government debt as at the 31 st of December 2011? Debt 2011 end = Debt 2010 end deficit = =$26.1b Marking guidelines: full points if get correct answer, half points if have the formula but get the wrong answer, full points for part if error is carried over from a previous part Page 19

20 PROBLEM 7: (8 points) Figure: Productivity in Chinchilla H is human capital per worker and is measured in years of schooling. Use the ln formula for growth. Human capital per worker grew from 10 in 1952 to 13 in Physical capital per worker grew from 200 in 1952 to 700 in 2012 A) (2 points) What was the average annual rate of productivity growth in Chinchilla between 1952 and 2012? x=100/60*ln(8/2.25)=2.11% B) (2 points) What fraction of productivity growth can be attributed to growth in physical capital per worker? x=100/60*ln(3/2.25)= /2.11=22.68% C) (2 points) What fraction of productivity growth can be attributed to growth in human capital per worker? x=100/60*ln(4/3)=0.479 (or x=100/60*ln(8/6)=0.479) 0.479/2.11=22.68% D) (1 point) What fraction of productivity growth is not attributable to either growth in physical capital per worker or growth in human capital per worker? =54.64% E) (1 point) The part of productivity growth is not attributable to growth in physical capital per worker or growth in human capital per worker is generally attributed to technology growth Page 20

Principles of Macroeconomics Prof. Yamin Ahmad ECON 202 Fall 2004

Principles of Macroeconomics Prof. Yamin Ahmad ECON 202 Fall 2004 Principles of Macroeconomics Prof. Yamin Ahmad ECON 202 Fall 2004 Sample Final Exam Name Id # Part B Instructions: Please answer in the space provided and circle your answer on the question paper as well.

More information

1 Multiple Choice - 50 Points

1 Multiple Choice - 50 Points Econ 201 Final Winter 2008 SOLUTIONS 1 Multiple Choice - 50 Points (In this section each question is worth 1 point) 1. Suppose a waiter deposits his cash tips into his savings account. As a result of only

More information

Chapter 12. Aggregate Expenditure and Output in the Short Run

Chapter 12. Aggregate Expenditure and Output in the Short Run Chapter 12. Aggregate Expenditure and Output in the Short Run Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics Aggregate Expenditure (AE)

More information

chapter: Solution Fiscal Policy

chapter: Solution Fiscal Policy Fiscal Policy chapter: 28 13 ECONOMICS MACROECONOMICS 1. The accompanying diagram shows the current macroeconomic situation for the economy of Albernia. You have been hired as an economic consultant to

More information

2.If actual investment is greater than planned investment, inventories increase more than planned. TRUE.

2.If actual investment is greater than planned investment, inventories increase more than planned. TRUE. Macro final exam study guide True/False questions - Solutions Case, Fair, Oster Chapter 8 Aggregate Expenditure and Equilibrium Output 1.Firms react to unplanned inventory investment by reducing output.

More information

AGGREGATE DEMAND AND AGGREGATE SUPPLY The Influence of Monetary and Fiscal Policy on Aggregate Demand

AGGREGATE DEMAND AND AGGREGATE SUPPLY The Influence of Monetary and Fiscal Policy on Aggregate Demand AGGREGATE DEMAND AND AGGREGATE SUPPLY The Influence of Monetary and Fiscal Policy on Aggregate Demand Suppose that the economy is undergoing a recession because of a fall in aggregate demand. a. Using

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Suvey of Macroeconomics, MBA 641 Fall 2006, Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Modern macroeconomics emerged from

More information

EC2105, Professor Laury EXAM 2, FORM A (3/13/02)

EC2105, Professor Laury EXAM 2, FORM A (3/13/02) EC2105, Professor Laury EXAM 2, FORM A (3/13/02) Print Your Name: ID Number: Multiple Choice (32 questions, 2.5 points each; 80 points total). Clearly indicate (by circling) the ONE BEST response to each

More information

Practice Problems Mods 25, 28, 29

Practice Problems Mods 25, 28, 29 Practice Problems Mods 25, 28, 29 Multiple Choice Identify the choice that best completes the statement or answers the question. Scenario 25-1 First National Bank First National Bank has $80 million in

More information

Econ 202 Section 2 Final Exam

Econ 202 Section 2 Final Exam Douglas, Fall 2009 December 17, 2009 A: Special Code 0000 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Section 2 Final Exam 1. The present value

More information

What three main functions do they have? Reducing transaction costs, reducing financial risk, providing liquidity

What three main functions do they have? Reducing transaction costs, reducing financial risk, providing liquidity Unit 4 Test Review KEY Savings, Investment and the Financial System 1. What is a financial intermediary? Explain how each of the following fulfills that role: Financial Intermediary: Transforms funds into

More information

SRAS. is less than Y P

SRAS. is less than Y P KrugmanMacro_SM_Ch12.qxp 11/15/05 3:18 PM Page 141 Fiscal Policy 1. The accompanying diagram shows the current macroeconomic situation for the economy of Albernia. You have been hired as an economic consultant

More information

Change Effect on nominal money demand Effect on real money demand Decrease in aggregate price level Shift nominal money demand to left Has no effect

Change Effect on nominal money demand Effect on real money demand Decrease in aggregate price level Shift nominal money demand to left Has no effect AP Macroeconomics Unit 4 Review Session Money Market 1. Draw the money market, indicating the equilibrium interest rate and quantity. 2. Use the following table to answer this question. Change Effect on

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Econ 111 Summer 2007 Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The classical dichotomy allows us to explore economic growth

More information

MONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL*

MONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL* Chapter 11 MONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL* The Demand for Topic: Influences on Holding 1) The quantity of money that people choose to hold depends on which of the following? I. The price

More information

1. Firms react to unplanned inventory investment by increasing output.

1. Firms react to unplanned inventory investment by increasing output. Macro Exam 2 Self Test -- T/F questions Dr. McGahagan Fill in your answer (T/F) in the blank in front of the question. If false, provide a brief explanation of why it is false, and state what is true.

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Survey of Macroeconomics, MBA 641 Fall 2006, Quiz 4 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The central bank for the United States

More information

INTRODUCTION TO MACROECONOMICS MIDTERM- SAMPLE QUESTIONS

INTRODUCTION TO MACROECONOMICS MIDTERM- SAMPLE QUESTIONS INTRODUCTION TO MACROECONOMICS MIDTERM- SAMPLE QUESTIONS MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In May 2009, Ford Motor Company's sales

More information

Econ 202 Final Exam. Douglas, Spring 2010 May 6, 2010 PLEDGE: I have neither given nor received unauthorized help on this exam.

Econ 202 Final Exam. Douglas, Spring 2010 May 6, 2010 PLEDGE: I have neither given nor received unauthorized help on this exam. , Spring 2010 May 6, 2010 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Final Exam Multiple Choice. 2 points each. 1. According to the long-run

More information

PRACTICE- Unit 6 AP Economics

PRACTICE- Unit 6 AP Economics PRACTICE- Unit 6 AP Economics Multiple Choice Identify the choice that best completes the statement or answers the question. 1. The term liquid asset means: A. that the asset is used in a barter exchange.

More information

3 Macroeconomics LESSON 8

3 Macroeconomics LESSON 8 3 Macroeconomics LESSON 8 Fiscal Policy Introduction and Description Fiscal policy is one of the two demand management policies available to policy makers. Government expenditures and the level and type

More information

QUIZ IV Version 1. March 24, 2004. 4:35 p.m. 5:40 p.m. BA 2-210

QUIZ IV Version 1. March 24, 2004. 4:35 p.m. 5:40 p.m. BA 2-210 NAME: Student ID: College of Business Administration Department of Economics Principles of Macroeconomics O. Mikhail ECO 2013-0008 Spring 2004 QUIZ IV Version 1 This closed book QUIZ is worth 100 points.

More information

CHAPTER 7: AGGREGATE DEMAND AND AGGREGATE SUPPLY

CHAPTER 7: AGGREGATE DEMAND AND AGGREGATE SUPPLY CHAPTER 7: AGGREGATE DEMAND AND AGGREGATE SUPPLY Learning goals of this chapter: What forces bring persistent and rapid expansion of real GDP? What causes inflation? Why do we have business cycles? How

More information

Economics 152 Solution to Sample Midterm 2

Economics 152 Solution to Sample Midterm 2 Economics 152 Solution to Sample Midterm 2 N. Das PART 1 (84 POINTS): Answer the following 28 multiple choice questions on the scan sheet. Each question is worth 3 points. 1. If Congress passes legislation

More information

Econ 202 Final Exam. Table 3-1 Labor Hours Needed to Make 1 Pound of: Meat Potatoes Farmer 8 2 Rancher 4 5

Econ 202 Final Exam. Table 3-1 Labor Hours Needed to Make 1 Pound of: Meat Potatoes Farmer 8 2 Rancher 4 5 Econ 202 Final Exam 1. If inflation expectations rise, the short-run Phillips curve shifts a. right, so that at any inflation rate unemployment is higher. b. left, so that at any inflation rate unemployment

More information

Economics 101 Multiple Choice Questions for Final Examination Miller

Economics 101 Multiple Choice Questions for Final Examination Miller Economics 101 Multiple Choice Questions for Final Examination Miller PLEASE DO NOT WRITE ON THIS EXAMINATION FORM. 1. Which of the following statements is correct? a. Real GDP is the total market value

More information

Chapter 13. Aggregate Demand and Aggregate Supply Analysis

Chapter 13. Aggregate Demand and Aggregate Supply Analysis Chapter 13. Aggregate Demand and Aggregate Supply Analysis Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics In the short run, real GDP and

More information

2 0 0 0 E D I T I O N CLEP O F F I C I A L S T U D Y G U I D E. The College Board. College Level Examination Program

2 0 0 0 E D I T I O N CLEP O F F I C I A L S T U D Y G U I D E. The College Board. College Level Examination Program 2 0 0 0 E D I T I O N CLEP O F F I C I A L S T U D Y G U I D E College Level Examination Program The College Board Principles of Macroeconomics Description of the Examination The Subject Examination in

More information

Econ 330 Exam 1 Name ID Section Number

Econ 330 Exam 1 Name ID Section Number Econ 330 Exam 1 Name ID Section Number MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) If during the past decade the average rate of monetary growth

More information

2.5 Monetary policy: Interest rates

2.5 Monetary policy: Interest rates 2.5 Monetary policy: Interest rates Learning Outcomes Describe the role of central banks as regulators of commercial banks and bankers to governments. Explain that central banks are usually made responsible

More information

Macroeconomics, Fall 2007 Exam 3, TTh classes, various versions

Macroeconomics, Fall 2007 Exam 3, TTh classes, various versions Name: _ Days/Times Class Meets: Today s Date: Macroeconomics, Fall 2007 Exam 3, TTh classes, various versions Read these Instructions carefully! You must follow them exactly! I) On your Scantron card you

More information

The level of price and inflation Real GDP: the values of goods and services measured using a constant set of prices

The level of price and inflation Real GDP: the values of goods and services measured using a constant set of prices Chapter 2: Key Macroeconomics Variables ECON2 (Spring 20) 2 & 4.3.20 (Tutorial ) National income accounting Gross domestic product (GDP): The market value of all final goods and services produced within

More information

Econ 202 Section 4 Final Exam

Econ 202 Section 4 Final Exam Douglas, Fall 2009 December 15, 2009 A: Special Code 00004 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Section 4 Final Exam 1. Oceania buys $40

More information

13 EXPENDITURE MULTIPLIERS: THE KEYNESIAN MODEL* Chapter. Key Concepts

13 EXPENDITURE MULTIPLIERS: THE KEYNESIAN MODEL* Chapter. Key Concepts Chapter 3 EXPENDITURE MULTIPLIERS: THE KEYNESIAN MODEL* Key Concepts Fixed Prices and Expenditure Plans In the very short run, firms do not change their prices and they sell the amount that is demanded.

More information

Introduction to Macroeconomics 1012 Final Exam Spring 2013 Instructor: Elsie Sawatzky

Introduction to Macroeconomics 1012 Final Exam Spring 2013 Instructor: Elsie Sawatzky Introduction to Macroeconomics 1012 Final Exam Spring 2013 Instructor: Elsie Sawatzky Name Time: 2 hours Marks: 80 Multiple choice questions 1 mark each and a choice of 2 out of 3 short answer question

More information

Exam 1 Review. 3. A severe recession is called a(n): A) depression. B) deflation. C) exogenous event. D) market-clearing assumption.

Exam 1 Review. 3. A severe recession is called a(n): A) depression. B) deflation. C) exogenous event. D) market-clearing assumption. Exam 1 Review 1. Macroeconomics does not try to answer the question of: A) why do some countries experience rapid growth. B) what is the rate of return on education. C) why do some countries have high

More information

AP Macroeconomics. Practice Exam. Advanced Placement Program

AP Macroeconomics. Practice Exam. Advanced Placement Program Advanced Placement Program AP Macroeconomics Practice Exam The questions contained in this AP Macroeconomics Practice Exam are written to the content specifications of AP Exams for this subject. Taking

More information

Chapter 13 Money and Banking

Chapter 13 Money and Banking Chapter 13 Money and Banking Multiple Choice Questions Choose the one alternative that best completes the statement or answers the question. 1. The most important function of money is (a) as a store of

More information

13. If Y = AK 0.5 L 0.5 and A, K, and L are all 100, the marginal product of capital is: A) 50. B) 100. C) 200. D) 1,000.

13. If Y = AK 0.5 L 0.5 and A, K, and L are all 100, the marginal product of capital is: A) 50. B) 100. C) 200. D) 1,000. Name: Date: 1. In the long run, the level of national income in an economy is determined by its: A) factors of production and production function. B) real and nominal interest rate. C) government budget

More information

Using an appropriately labeled money market graph, show the effects of an open market purchase of government securities by the FED on :

Using an appropriately labeled money market graph, show the effects of an open market purchase of government securities by the FED on : Using an appropriately labeled money market graph, show the effects of an open market purchase of government securities by the FED on : The money supply Interest rates Nominal Interest rates i1 i2 Sm1

More information

changes in spending changes in income/output AE = Aggregate Expenditures = C + I + G + Xn = AD

changes in spending changes in income/output AE = Aggregate Expenditures = C + I + G + Xn = AD small larger changes in spending changes in income/output AE = Aggregate Expenditures = C + I + G + Xn = AD The Multiplier Effect A small change in spending gives rise to a larger change in income/output

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Study Questions 5 (Money) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The functions of money are 1) A) medium of exchange, unit of account,

More information

Study Questions 8 (Keynesian Model) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Study Questions 8 (Keynesian Model) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Study Questions 8 (Keynesian Model) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In the Keynesian model of aggregate expenditure, real GDP is

More information

The Macroeconomic Situation and Monetary Policy in Russia. Ladies and Gentlemen,

The Macroeconomic Situation and Monetary Policy in Russia. Ladies and Gentlemen, The Money and Banking Conference Monetary Policy under Uncertainty Dr. Sergey Ignatiev Chairman of the Bank of Russia (The 4 th of June 2007, Central Bank of Argentina, Buenos Aires) The Macroeconomic

More information

Econ 202 Section H01 Midterm 2

Econ 202 Section H01 Midterm 2 , Spring 2010 March 16, 2010 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Section H01 Midterm 2 Multiple Choice. 2.5 points each. 1. What would

More information

Chapter 7 The Asset Market, Money, and Prices

Chapter 7 The Asset Market, Money, and Prices Chapter 7 The Asset Market, Money, and Prices Multiple Choice Questions 1. A disadvantage of the barter system is that (a) no trade occurs. (b) people must produce all their own food, clothing, and shelter.

More information

Chapter 6 Economic Growth

Chapter 6 Economic Growth Chapter 6 Economic Growth 1 The Basics of Economic Growth 1) The best definition for economic growth is A) a sustained expansion of production possibilities measured as the increase in real GDP over a

More information

FISCAL POLICY* Chapter. Key Concepts

FISCAL POLICY* Chapter. Key Concepts Chapter 11 FISCAL POLICY* Key Concepts The Federal Budget The federal budget is an annual statement of the government s expenditures and tax revenues. Using the federal budget to achieve macroeconomic

More information

Economic Systems. 1. MARKET ECONOMY in comparison to 2. PLANNED ECONOMY

Economic Systems. 1. MARKET ECONOMY in comparison to 2. PLANNED ECONOMY Economic Systems The way a country s resources are owned and the way that country takes decisions as to what to produce, how much to produce and how to distribute what has been produced determine the type

More information

0 100 200 300 Real income (Y)

0 100 200 300 Real income (Y) Lecture 11-1 6.1 The open economy, the multiplier, and the IS curve Assume that the economy is either closed (no foreign trade) or open. Assume that the exchange rates are either fixed or flexible. Assume

More information

Practice Problems on Money and Monetary Policy

Practice Problems on Money and Monetary Policy Practice Problems on Money and Monetary Policy 1- Define money. How does the economist s use of this term differ from its everyday meaning? Money is the economist s term for assets that can be used in

More information

Answers to Text Questions and Problems in Chapter 11

Answers to Text Questions and Problems in Chapter 11 Answers to Text Questions and Problems in Chapter 11 Answers to Review Questions 1. The aggregate demand curve relates aggregate demand (equal to short-run equilibrium output) to inflation. As inflation

More information

Econ 202 Section 2 Midterm 2

Econ 202 Section 2 Midterm 2 Douglas, Fall 2009 November 3, 2009 A: Special Code 0000 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Section 2 Midterm 2 1. The sale of stocks

More information

Refer to Figure 17-1

Refer to Figure 17-1 Chapter 17 1. Inflation can be measured by the a. change in the consumer price index. b. percentage change in the consumer price index. c. percentage change in the price of a specific commodity. d. change

More information

Answers to Text Questions and Problems. Chapter 22. Answers to Review Questions

Answers to Text Questions and Problems. Chapter 22. Answers to Review Questions Answers to Text Questions and Problems Chapter 22 Answers to Review Questions 3. In general, producers of durable goods are affected most by recessions while producers of nondurables (like food) and services

More information

MONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL*

MONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL* Chapter 11 MONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL* Key Concepts The Demand for Money Four factors influence the demand for money: The price level An increase in the price level increases the nominal

More information

Econ 336 - Spring 2007 Homework 5

Econ 336 - Spring 2007 Homework 5 Econ 336 - Spring 2007 Homework 5 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The real exchange rate, q, is defined as A) E times P B)

More information

Multiple Choice Identify the choice that best completes the statement or answers the question.

Multiple Choice Identify the choice that best completes the statement or answers the question. Unit 2 review Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Which of the following is false about the circular-flow diagram? A. Households are the primary

More information

4. The minimum amount of owners' equity in a bank mandated by regulators is called a requirement. A) reserve B) margin C) liquidity D) capital

4. The minimum amount of owners' equity in a bank mandated by regulators is called a requirement. A) reserve B) margin C) liquidity D) capital Chapter 4 - Sample Questions 1. Quantitative easing is most closely akin to: A) discount lending. B) open-market operations. C) fractional-reserve banking. D) capital requirements. 2. Money market mutual

More information

CHAPTER 7 EQUILIBRIUM NATIONAL INCOME

CHAPTER 7 EQUILIBRIUM NATIONAL INCOME CHAPTER 7 EQUILIBRIUM NATIONAL INCOME Chapter in a Nutshell Two very different groups of people are always at work making decisions concerning spending, saving, and investment that affect each other. The

More information

Lecture 7: Savings, Investment and Government Debt

Lecture 7: Savings, Investment and Government Debt Lecture 7: Savings, Investment and Government Debt September 18, 2014 Prof. Wyatt Brooks Problem Set 1 returned Announcements Groups for in-class presentations will be announced today SAVING, INVESTMENT,

More information

chapter: Aggregate Demand and Aggregate Supply Krugman/Wells 2009 Worth Publishers 1 of 58

chapter: Aggregate Demand and Aggregate Supply Krugman/Wells 2009 Worth Publishers 1 of 58 chapter: 12 >> Aggregate Demand and Aggregate Supply Krugman/Wells 2009 Worth Publishers 1 of 58 WHAT YOU WILL LEARN IN THIS CHAPTER How the aggregate demand curve illustrates the relationship between

More information

LECTURE NOTES ON MACROECONOMIC PRINCIPLES

LECTURE NOTES ON MACROECONOMIC PRINCIPLES LECTURE NOTES ON MACROECONOMIC PRINCIPLES Peter Ireland Department of Economics Boston College peter.ireland@bc.edu http://www2.bc.edu/peter-ireland/ec132.html Copyright (c) 2013 by Peter Ireland. Redistribution

More information

_FALSE 1. Firms react to unplanned inventory investment by increasing output.

_FALSE 1. Firms react to unplanned inventory investment by increasing output. Macro Exam 2 Self Test -- ANSWERS Dr. McGahagan WARNING -- Be sure to take the self-test before peeking at the answers. Chapter 8 -- Aggregate Expenditure and Equilibrium Output _FALSE 1. Firms react to

More information

Case, Fair and Oster Macroeconomics Chapter 11 Problems Money Demand and the Equilibrium Interest Rate

Case, Fair and Oster Macroeconomics Chapter 11 Problems Money Demand and the Equilibrium Interest Rate Case, Fair and Oster Macroeconomics Chapter 11 Problems Money Demand and the Equilibrium Interest Rate Money demand equation. P Y Md = k * -------- where k = percent of nominal income held as money ( Cambridge

More information

International Economic Relations

International Economic Relations nswers to Problem Set #5 International conomic Relations Prof. Murphy Chapter 5 Krugman and Obstfeld. Relative PPP predicts that inflation differentials are matched by changes in the exchange rate. Under

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Of the four players in the money supply process, most observers agree that the most important player

More information

ECON 3312 Macroeconomics Exam 3 Fall 2014. Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

ECON 3312 Macroeconomics Exam 3 Fall 2014. Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. ECON 3312 Macroeconomics Exam 3 Fall 2014 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Everything else held constant, an increase in net

More information

Econ 202 Final Exam. Douglas, Spring 2006 PLEDGE: I have neither given nor received unauthorized help on this exam.

Econ 202 Final Exam. Douglas, Spring 2006 PLEDGE: I have neither given nor received unauthorized help on this exam. , Spring 2006 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Final Exam 1. When the government spends more, the initial effect is that a. aggregate

More information

Ch. 38 Practice MC 1. In international financial transactions, what are the only two things that individuals and firms can exchange? A.

Ch. 38 Practice MC 1. In international financial transactions, what are the only two things that individuals and firms can exchange? A. Ch. 38 Practice MC 1. In international financial transactions, what are the only two things that individuals and firms can exchange? A. Currency and real assets. B. Services and manufactured goods. C.

More information

BUSINESS ECONOMICS CEC2 532-751 & 761

BUSINESS ECONOMICS CEC2 532-751 & 761 BUSINESS ECONOMICS CEC2 532-751 & 761 PRACTICE MACROECONOMICS MULTIPLE CHOICE QUESTIONS Warning: These questions have been posted to give you an opportunity to practice with the multiple choice format

More information

7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Chapter. Key Concepts

7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Chapter. Key Concepts Chapter 7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Key Concepts Aggregate Supply The aggregate production function shows that the quantity of real GDP (Y ) supplied depends on the quantity of labor (L ),

More information

Project LINK Meeting New York, 20-22 October 2010. Country Report: Australia

Project LINK Meeting New York, 20-22 October 2010. Country Report: Australia Project LINK Meeting New York, - October 1 Country Report: Australia Prepared by Peter Brain: National Institute of Economic and Industry Research, and Duncan Ironmonger: Department of Economics, University

More information

= C + I + G + NX ECON 302. Lecture 4: Aggregate Expenditures/Keynesian Model: Equilibrium in the Goods Market/Loanable Funds Market

= C + I + G + NX ECON 302. Lecture 4: Aggregate Expenditures/Keynesian Model: Equilibrium in the Goods Market/Loanable Funds Market Intermediate Macroeconomics Lecture 4: Introduction to the Goods Market Review of the Aggregate Expenditures model and the Keynesian Cross ECON 302 Professor Yamin Ahmad Components of Aggregate Demand

More information

Practiced Questions. Chapter 20

Practiced Questions. Chapter 20 Practiced Questions Chapter 20 1. The model of aggregate demand and aggregate supply a. is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution

More information

Econ 202 H01 Final Exam Spring 2005

Econ 202 H01 Final Exam Spring 2005 Econ202Final Spring 2005 1 Econ 202 H01 Final Exam Spring 2005 1. Which of the following tends to reduce the size of a shift in aggregate demand? a. the multiplier effect b. the crowding-out effect c.

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The government agency that oversees the banking system and is responsible for the conduct

More information

Name: Date: 3. Variables that a model tries to explain are called: A. endogenous. B. exogenous. C. market clearing. D. fixed.

Name: Date: 3. Variables that a model tries to explain are called: A. endogenous. B. exogenous. C. market clearing. D. fixed. Name: Date: 1 A measure of how fast prices are rising is called the: A growth rate of real GDP B inflation rate C unemployment rate D market-clearing rate 2 Compared with a recession, real GDP during a

More information

HW 2 Macroeconomics 102 Due on 06/12

HW 2 Macroeconomics 102 Due on 06/12 HW 2 Macroeconomics 102 Due on 06/12 1.What are the three important macroeconomic goals about which most economists, and society at large, agree? a. economic growth, full employment, and low interest rates

More information

Chapter 5. Saving and Investment in the Open Economy. 2008 Pearson Addison-Wesley. All rights reserved

Chapter 5. Saving and Investment in the Open Economy. 2008 Pearson Addison-Wesley. All rights reserved Chapter 5 Saving and Investment in the Open Economy Chapter Outline Balance of Payments Accounting Goods Market Equilibrium in an Open Economy Saving and Investment in a Small Open Economy Saving and Investment

More information

With lectures 1-8 behind us, we now have the tools to support the discussion and implementation of economic policy.

With lectures 1-8 behind us, we now have the tools to support the discussion and implementation of economic policy. The Digital Economist Lecture 9 -- Economic Policy With lectures 1-8 behind us, we now have the tools to support the discussion and implementation of economic policy. There is still great debate about

More information

University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi

University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi CH 24 Money Price Inflation 1) Money is A) currency plus coins. B) the same as gold.

More information

Economic Outlook 2009/2010

Economic Outlook 2009/2010 Economic Outlook 29/21 s Twenty-Eighth Annual Forecast Luncheon Paul R. Portney Dean, Professor of Economics, and Halle Chair in Leadership Marshall J. Vest Director Economic and Business Research Center

More information

Econ 202 Final Exam. Douglas, Fall 2007 Version A Special Codes 00000. PLEDGE: I have neither given nor received unauthorized help on this exam.

Econ 202 Final Exam. Douglas, Fall 2007 Version A Special Codes 00000. PLEDGE: I have neither given nor received unauthorized help on this exam. , Fall 2007 Version A Special Codes 00000 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Final Exam 1. On average over the past 50 years, the U.S.

More information

Solution. Solution. Monetary Policy. macroeconomics. economics

Solution. Solution. Monetary Policy. macroeconomics. economics KrugmanMacro_SM_Ch14.qxp 10/27/05 3:25 PM Page 165 Monetary Policy 1. Go to the FOMC page of the Federal Reserve Board s website (http://www. federalreserve.gov/fomc/) to find the statement issued after

More information

Business Conditions Analysis Prof. Yamin Ahmad ECON 736

Business Conditions Analysis Prof. Yamin Ahmad ECON 736 Business Conditions Analysis Prof. Yamin Ahmad ECON 736 Sample Final Exam Name Id # Instructions: There are two parts to this midterm. Part A consists of multiple choice questions. Please mark the answers

More information

3. a. If all money is held as currency, then the money supply is equal to the monetary base. The money supply will be $1,000.

3. a. If all money is held as currency, then the money supply is equal to the monetary base. The money supply will be $1,000. Macroeconomics ECON 2204 Prof. Murphy Problem Set 2 Answers Chapter 4 #2, 3, 4, 5, 6, 7, and 9 (on pages 102-103) 2. a. When the Fed buys bonds, the dollars that it pays to the public for the bonds increase

More information

Answer: C Learning Objective: Money supply Level of Learning: Knowledge Type: Word Problem Source: Unique

Answer: C Learning Objective: Money supply Level of Learning: Knowledge Type: Word Problem Source: Unique 1.The aggregate demand curve shows the relationship between inflation and: A) the nominal interest rate. D) the exchange rate. B) the real interest rate. E) short-run equilibrium output. C) the unemployment

More information

Government Budget and Fiscal Policy CHAPTER

Government Budget and Fiscal Policy CHAPTER Government Budget and Fiscal Policy 11 CHAPTER The National Budget The national budget is the annual statement of the government s expenditures and tax revenues. Fiscal policy is the use of the federal

More information

The Return of Saving

The Return of Saving Martin Feldstein the u.s. savings rate and the global economy The savings rate of American households has been declining for more than a decade and recently turned negative. This decrease has dramatically

More information

Chapter 18 of Blink and Dorton s IB Course Companion for Economics Section 3.4 of Matt McGee s Economics in Terms of the Good, the Bad and the

Chapter 18 of Blink and Dorton s IB Course Companion for Economics Section 3.4 of Matt McGee s Economics in Terms of the Good, the Bad and the Chapter 18 of Blink and Dorton s IB Course Companion for Economics Section 3.4 of Matt McGee s Economics in Terms of the Good, the Bad and the Economist Section 3 of Constantine Ziogas IB Study Guide :

More information

Savings, Investment Spending, and the Financial System

Savings, Investment Spending, and the Financial System Savings, Investment Spending, and the Financial System 1. Given the following information about the closed economy of Brittania, what is the level of investment spending and private savings, and what is

More information

ECONOMIC GROWTH* Chapter. Key Concepts

ECONOMIC GROWTH* Chapter. Key Concepts Chapter 5 MEASURING GDP AND ECONOMIC GROWTH* Key Concepts Gross Domestic Product Gross domestic product, GDP, is the market value of all the final goods and services produced within in a country in a given

More information

MGE#12 The Balance of Payments

MGE#12 The Balance of Payments MGE#12 The Balance of Payments The Current Account, the Capital Account and the Balance of Payments Introduction to the Foreign Exchange Market Savings, Investment and the Current Account 1 From last session

More information

Cosumnes River College Principles of Macroeconomics Problem Set 11 Will Not Be Collected

Cosumnes River College Principles of Macroeconomics Problem Set 11 Will Not Be Collected Name: Solutions Cosumnes River College Principles of Macroeconomics Problem Set 11 Will Not Be Collected Fall 2015 Prof. Dowell Instructions: This problem set will not be collected. You should still work

More information

Answers. Event: a tax cut 1. affects C, AD curve 2. shifts AD right 3. SR eq m at point B. P and Y higher, unemp lower 4.

Answers. Event: a tax cut 1. affects C, AD curve 2. shifts AD right 3. SR eq m at point B. P and Y higher, unemp lower 4. A C T I V E L E A R N I N G 2: Answers Event: a tax cut 1. affects C, AD curve 2. shifts AD right 3. SR eq m at point B. P and Y higher, unemp lower 4. Over time, P E rises, SRAS shifts left, until LR

More information

Macroeconomics Instructor Miller Fiscal Policy Practice Problems

Macroeconomics Instructor Miller Fiscal Policy Practice Problems Macroeconomics Instructor Miller Fiscal Policy Practice Problems 1. Fiscal policy refers to changes in A) state and local taxes and purchases that are intended to achieve macroeconomic policy objectives.

More information

Econ 102 Aggregate Supply and Demand

Econ 102 Aggregate Supply and Demand Econ 102 ggregate Supply and Demand 1. s on previous homework assignments, turn in a news article together with your summary and explanation of why it is relevant to this week s topic, ggregate Supply

More information

University of Lethbridge Department of Economics ECON 1012 Introduction to Microeconomics Instructor: Michael G. Lanyi. Chapter 29 Fiscal Policy

University of Lethbridge Department of Economics ECON 1012 Introduction to Microeconomics Instructor: Michael G. Lanyi. Chapter 29 Fiscal Policy University of Lethbridge Department of Economics ECON 1012 Introduction to Microeconomics Instructor: Michael G. Lanyi Chapter 29 Fiscal Policy 1) If revenues exceed outlays, the government's budget balance

More information

University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi

University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi CH 27 Expenditure Multipliers 1) Disposable income is A) aggregate income minus transfer

More information