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Unformatted text preview: Economics 19900 Autumn 2006 THIRD HOUR EXAMINATION Name (Please Print): ______________________________________ [40 Points Possible] Part I. Multiple Choice. Circle letter corresponding to your answer. One point each; 19 points total. 1. On which or whose balance sheet would U.S. government securities be listed as a liability? a. the Feds b. commercial banks in the United States c. the Treasury Department d. private pension funds accounts e. banks in Beijing 2. With respect to Real Business Cycle theory, which of the following is not correct? a. The impulse for, or a cause of, a business cycle is growth in the money wage rate. b. The aggregate supply curve is vertical. c. Labor supply decreases if the real interest rate falls. d. The quantity of money has no effect on real GDP. e. By itself, a change in aggregate demand affects only the price level. 3. In the long run, an increase in the quantity of money in circulation: a. does not change real GDP. b. increases the price level. c. decreases velocity. d. increases potential GDP. e. will decrease the natural rate of unemployment. 4. Which of the following does not describe a function of money? a. a unit of account in a simple pricing system b. a store of value c. a medium of exchange d. a standard of deferred payment e. a hedge against inflation 5. Checking deposits at commercial banks are: a. money. b. not money until they are converted into currency. c. part of M2 but not M1. d. not money until converted into loans or some other interest-earning asset for the bank. e. less liquid than savings deposits. 6. Robert Lucas, in his Talking with interview from Parkin, finds fault with Real Business Cycle Theory for: a. not recognizing the contributions of Keynes with regard to how expectations affect technological advances. b. placing too little emphasis on budget deficits and government management of the economy. c. crediting fluctuations in the rate of technological change with explaining virtually 100 percent of the variation in GDP. d. suggesting that economic growth largely determined income in the U.S. today relative to our income in the 1960s. e. explaining the difference in per capita income between the United States and India almost solely on the basis of differences in physical capital in the two countries. differences in physical capital in the two countries....
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