Final Exam B with Answers - Introduction to Macroeconomics | ECON, Exams of Introduction to Macroeconomics

Download Final Exam B with Answers - Introduction to Macroeconomics | ECON and more Exams Introduction to Macroeconomics in PDF only on Docsity! Departmental Examination Economics E202 version B V?'/ 20 I)irections r Use the BLUE scantron sheet marked "Departmental Exam" r Part one of your final exam is the departmenl's final exam which consists of the following 20 multiple choice questions. You have at a minimum the first 45 minutes of the {inal examination designated time to answer these 20 questions. When marking your answers on the separate answer sheet, use a standafi#2 pencil and mark the best alternative for each question. r Fill out your answer sheet as soon as you sit down but do not begin answering the questions or turning this cover page until you are told to do so. e For all sections excep! Professor Self s section, Enter your name (last name, leave a space, first name) on the answer sheet. Fill in the Bubbles under your name. r For Professgr $-elfssgction, on the answer sheet lill in the name section with your: Indiana University User Name<space>Last name Please remember if your User Name has numbers (ia KimI2 or Jonesl1) st the end of it then write in those numbers hut don't dur*en in any circles under those numbers, r Enter your IU student number (not yow social security number) in columns A-J on the answer sheet or as instructed by your instructor. Fill in the Bubbles under your student number. r Tbe answer sheet for these 20 questions will be collected no later than 6:00 p.m. The consequence of not handing in your answer sheet when directed is that you will not receive any credit for this portion of your final examination. r You are encouraged to start Part II (your section final) ofyour final exam as soon as you are finished with these 20 questions. Version: B 8202-FaIt 2008 Department Final Examination Multiple Choice: On your answer sheet darken in the letter of your choice for each question. you should choose the suggested answer that BEST complete the statement or answers the question. I Ceorge purchased a new house with a mortgage loan from the Hoosier bank. In the loan contract, the nominal interest rate was fixed at 60/o per year, During the loan period, there was an unexpected' increase in inflation' Who gained purchasing power 6.uurc orine change in inflation? g$4L S?" 7?" Q consider an economy that is at its long-run equilibrium and the.economy is growing at a ratethat keepsthe economy on its potential grofih path. Assume furthei that the rir.ri'.tirg ,peed of money (velocity) iiililltill;:T:ffii."Dp gtws ai zv,and the "";i;;i money suppry incieases by Ayo,then the A. The Hoosier bank ft Neither George nor the Hoosier bank /C] George V Both Ceorge and the Hoosier bank E. It cannot be determined with the given information. t 62" _ 17" ; 62 F tt?" P, If there is a rightward shift in the money demand curve, which, wants to keep unemproyment at a consranr rare? ot:nt t$lotting should the Fed do if it @ lower its interest rate target,&, raise its interest rate target f liirfr:::,:1rrt usuaily does nor change when rhe money demand curve shiftsD. buy bonds in the open market operations E. sell bonds in via open market oierations O In regards to fiscal poricy, one benefit of automatic stabitizors is that they _.A ( i increase consumption during a recession above what it would otherwise be.Y increase consumption durini an "*punrion above what it would otherwise be.? cuute the cyclical deficit to fail during a recession.,E make GDp more volatile. t/ decrease consumption during a recession below what it would otherwise be. 2% 4% -4% -2% 6% 3u= Llz- x ,-\\t a"l\,.-7 B, C. D. E. H 2?a Version: B @ Suppose banks are required to hold resorves equal to 5 percentofdeposits, and thatthe Fed purchases $10 million of government securities. Then A. there will be no change in bank deposits. D. deposits will decrease up to a maximum of $200 million. [C) deposits will increase up to a maximum of $200 million. b1 deposits will increase up to a maximum of $10.63 million. E. deposits will decrease by $10 million. @ fne three most important sourses of economic growth are ,$ increases in government spending, increases in employment, and lower taxes.p lawer interest rates, increases in the capital stock, and increases in employment. J,c.increasesinpopulation,discoveryofnewrawmaterials'mdimpM -= tg9b[PJgg-'rD.@,increasesinthecapitalstock,andincreasesin\/ employment. ,F increases in the money supply, lower interest rates, and inc.rcases in the capital stock. $ troP= 20ao) @ n the short-run, an expansionary open market operation by the Federal Reserve would be to government securities. This action would result in purchase; the interest rate decreasing, an increase in aggregate spending, and an increase in RGDP -pr sell; the interest rate decreasing, reduce aggregate spending, and decrease RGDP.-( sell; the interest rate increasing, a reduction in aggregate spending, and a decrease in RCDP D. purchase; the interest rate decreasing, an increase in aggregate spending, and a decrease in RGDP ,y' purchase; the interest rate increasing, a reduction in aggregate spending, and an' increase in RGDP @ Assume that the exchange rate between the dollar and the yen is +1.20 = $1. Suppose the exchange rate changes to #L50 = $I. Because of the change we would expect to see no effect on exports or imports U.S. exports increase and U.S. imports decrease U.S. expo.rts increase and U.S. imports increase U.S. exports decrease and U.S. imports increase U.S. exports decrease and U.S. imports decrease A. B. c. @ E. t ZOo f'tt-lrta U Department Final Examination Version: B cpt d Suppose an economy has only three goods, and the typical family purchases the amounts given in the above table. If 2007 is the base year, then what is the cPI for 2008? A- 81.43 fn) tos.ztY sr.gs D. 88.27 E. n3.29 $1,950 $2,050 $4,500 $2,500 $2,150 rZDo(A: 7c+e ';"Li]tt"1S to&--<() o ,Y-a Itdilft** s(fi ), ( 28Ea '(),0) L?29 Consumption spending Wages and salaries Taxes Transfer payments Profit Exports Imports Interest Private investment spending $400 Based on the above information, GDP in this year was $1,500 $800 $300 $100 $300 $400 $s50 $250 C+ tr G* Nk lSoo + a@ +Loo {*- lro ftf0 6 B. c. D. E. ../ ![ tf ,n. average prices of domestic consumer goods increased while ths average prices of imported / \ consumer goods decreased, which of the following would Dgg! describe what would likely occur? n' fr ffr. GDP price index would decrease while the CPI would increase. I Y Both the GDP price index and the CPI would decrease. L-/ C. The GDP price index would increase more than the CpI. . D. The CPI would increase more than the GDP price index. E. Both the GDP price index and the CPI would increase by the same amount. .t,T cp, 5 - 6vP Department Final Examination Version: B @ Wttictr of the following would besj encourage investment in human capital? Higher marginaltax rates on labor income. Higher interest rates. A decrease in the wage gap between high school and college-educated workers' A reduction in life expectancy that encourages earlier retirement. An expansion of college loan programs. \ t- ![ niscat policy effects are reduced because an indirect effect of an increase in government spending is | \ut-- ,X! intercst rates increase and private sector spending on consumer durables and investment decrease. /8, interest rates decrease and private sector spending on consumer durables andv investment increase. net exports would most likely increase. interest rates decrease and private sector spending on consumer durables and investment decrease, interest rates increase and private sector spending on consumer durables and investment increase. fr e. .F