Solved Questions on Introduction Macroeconomics - Exam 3 | ECON, Exams of Introduction to Macroeconomics

Download Solved Questions on Introduction Macroeconomics - Exam 3 | ECON and more Exams Introduction to Macroeconomics in PDF only on Docsity! Economics E202 Sections 8427 (Professor Selfl Exam Three--Fall 2008 ) g\ --v ffi?a Version B Please do not turn this page until you are told to do so. After answering the following questions, turn in your Scantron sheet with your multiple choice answers and your answers to part two of the exam. You keep the multiple-choice questions (part one). I suggest you record your responses to the multiple choice questions on the questions sheet for your pf.t"n.. later. The test answers will be posted on Oncourse by l:00 p.m. this afternoon. The test is based on 80 points and each multiple-choice question you get correct earns you 2.8 points. The short answer questions can earn you up to 13 points. The number of points that are available to you is equal to 83 points. The 3 extra points are replacement points that you can use to replace any 3 points you missed on the exam. No one is aliowed to earn more than rc}% or 80 course points on this exam. There ue 25 multiple-choice questions and 3 short answer questions. It is your responsibility to ensure you have all your questions. Your percentage score is determined by the lowest of 100% or [(the number of multiple-choice questions that you answer correctly times 2.8 plus the number of points you eam on part two) divided by .81. You should use the scale in your syllabus to determine your letter grade for the exam. Your grades will be posted in Post'em (through Oncourse) Monday moming or as soon as they are graded. I will discuss the exam on Tuesday once they are graded. Tuesday we will be starting new material so it is important that you come to class. I On your scantron sheet fill in the name section with your: Indiana University User Namecspace>Last name Please remember if your User Name has numbers (i.e. Kim12 or Jones45) at the end of it then write in those numbers but donot darken in any circles under those numbers. You should also ensure the ovals are darkened in correctly with a #2 pencil. . NO CELL PHONES You may use a simple calculator (nonprogrammable), You may be asked to show your calculator and if any economic related information is found on or programmed into the calculator it will be considered cheating. Please keep your eyes on your exam only. Any looking around may be considered cheating. That would have a detrimental influence on your course grade and result in a student misconduct being filed on you, BLUE Center- Nl08 Economics F;202-8427 (Professor Self ) Exam Three, Fall2008 After answering the following questions, tum in your Scantron sheet with your multiple choice answers and your answers to part two of the exarn. You keep the multiple-choice questions (part one). I suggest you record your responses to the multiple choice questions on the questions sheet for your reference later. The test answers will be posted on Oncourse by l:00 p.m. this afternoon. The test is based on 80 points and each multiple-choice question you get correct earns you 2.8 points. The short answer questions can earn you up to l3 points. The number of points that are available to you is equal to 83 points. The 3 extra points are replacement points that you can use to replace any 3 points you missed on the exam. No one is allowed to earn more than rcA% or 80 course points on this exam. There are25 multiple-choice questions and 3 short amwer questions. It is your responsibility to ensure you have all your questions. Your percentage score is determined by the lowest of 100% or [(the number of multiple-choice questions that you answer correctly times 2.8 plus the number of points you earn on part two) divided by .81. You should use the scale in your syllabus to determine your letter grade for the exam. Your grades will be posted in Post'em (through'Oncourse) Monday morning or as soon as they are graded. I will discuss the exam on Tuesday once they are graded. Tuesday we will be starting new material so it is important that you come to class. Part One, MULTIPLE CHOICE: On your answer sheet darken in the letter of your choice for each question. You should choose the suggested answer that BEST completes the statement or answers the question. l. Which of the following would be considered a fiscal policy action? A) A federal tax cut on hybrid cars that is designed to encourage the purchase of fuel ^efficient cars. G)n tax cut designed to stimulate spending passed during a recession. 9f A city changes its hotel tax to attract tourists. ET't't " federal government mandates that everyone must purchase health insurance or be fined. pf Spending on the war in Afghanistan to promote homeland security. 2. Which of the following summarizes the president's and Congress'role in conducting monetary policy? @ Congt"ss and the president do not play a role in conducting monetary policy. ,fiThe president submits input to the chairman and the FOMC votes on it. f)fCongress has veto power over FOMC meeting decisions.pl Congress directs the FOMC on what its interest rate targets should be. j$Aotn the president and Congress determine the level of funds that the Fed needs to operate, and thereby influence policy. B-1 I Economics E,202-E427 (Professor Self ) Exam Three, Fall2008 13. If the required reserve ratio (RRR) is l0 percent and the Fed sells a $5,000 bond to the public in an open market operation, assuming people deposit all of their cash in a checking account and the banking system does not hold excess reserves, we would expect the money supply to after the banking system fully adjusts. J /J-irrcttrrre by $45,000- (B)jecrease by $50,000 Yf*ase by $50,000 oPf deuease by $45,000- "Bfdecrease by $5,000 14. The statement "the Dell laptop costs 2,500 dollars" illustrates which function of money? unit of account. ,rlt)@. 15. An increase in real GDP will lead to a(n) money demand and increase the interest rate. ,kf decrease money demand and decrease the interest rate. B-4 Economics 8202-8427 (Professor Self ) Exam Three, Fall2008 ffirftr quantity of money demanded exceeds the quantity of money supplied at a given / '|n"t"ttrate, what will happen that restores the money market to equilibrium? t@inerease, and the interest rate will fall until equilibrium is attained where the money demand and supply curves intersect. B)'The public will try to buy bonds, the price of bonds will decrease, and the interest - rate will fall until equilibrium is attained where the money demand and supply curyes intersect. "Zffne public will try to buy bonds, the price of bonds will increase, arftllrtlfleFsl. ained where the money demand and supply and the interest rate will rise until equilibrium is attained where the money demand and supply curves intersect at the market interest rate ;Ihe public will try to buy bonds, the price of bonds will increase, and the interest rate will fall until equilibrium is attained where the money demand and supply curves intersect at the market interest rate. 17. The quantity thSoV of money assumes that ./rfthe money supply is constant. }}the velocity of money is zero. ,gl tne velocity of money fluctuates unpredictably. ffihe velocity of money is negative. " @lne velocity of money is constant. B-5 Economics 8202-8427 (Professor Self ) Exam Three, Fall2008 18. Given the balance sheet below and assuming a required reserve ratio of l0 percent, how much (in dollar terms) must the bank hold in required reserves? $30 million .trflt is failing to meet its reserve requirement, and has no excess reserves. Att is just meeting its reserve requirement, but has no excess reseryes. (C))lt is meeting its reserve requirement, and has $15 million in excess reseryes. dltis meeting its reserve requirement, and has $10 million in excess reserves. E) It is meeting its reserve requirement, and has $5 million in excess reseryes. \l l\From the following information, it can be determined that the value of Ml is equal to / \ and the value of M2 is equal to _. I Assets Property $10 million Government bonds $20 million cash in vault $5 million Deposited at the Fed $15 million Loans $30 million Small time deposits Checking deposits Savings-type accounts Money market mutual funds Travelers' checks Large time deposits Cash in hand E) Ml:$425 billion; M2:$2,425 billion Liabilities and Net Worth Demand deposits $50 million Net worth \/ -$55#btlfion .S30$,'biltion -$TSetrifiion -$60$triiti'tttr 'S25billbn S60+bi'Ttion *$+Oebi*ior nl 3oo E \oo - qz5 f42 *so 0oo bso 6w - 3.oZS TCrLIPY 1v7H- @;M2+iStf?fiittion l:5425 billion; M2:$3,025 billion B-6