Econ 1 Exam: Mid and Final, Terms, Definitions, Calculations, and Monetary Views - Prof. I, Exams of Introduction to Macroeconomics

Download Econ 1 Exam: Mid and Final, Terms, Definitions, Calculations, and Monetary Views - Prof. I and more Exams Introduction to Macroeconomics in PDF only on Docsity! Econ 1; Mid-term Exam; Instructor: I Hossein-zadeh Part A: Essay, Definitions, and Calculations Questions (Answer any 3 of 4; 15 points each ) I. Carefully define the following terms and explain their importance to the study of economics: a. leading economic indicators, b. Rules versus discretion c. controlling M vs. controlling r d. effects of interest rate on velocity d. monetarism e. Keynesianism f. equation of exchange g. automatic stabilizer II. Noble Laureate Milton Friedman is said to have endorsed replacing the federal Reserve Board with a (smart) horse. Once a year, this horse would trot to the front of the Fed building as reporters asked, "What will happen to the money supply this year?" The horse would tap its hoof four times and headlines the next day would proclaim: "Money Supply to Grow four Percent This Year!" What does this tell you about Friedman's monetary view? Explain and evaluate. III. Compute the level of equilibrium GDP for the following economy: C = 100 + 0.8(Y - T) I = 80 G = 50 T = 40 X = 35 IM = 40 IV. Carefully draw a diagram which shows the level of expenditures at various levels of real GDP. Indicate the level of equilibrium GDP on your diagram. Be sure that your diagram is completely and correctly labeled.