econ205Midterm1Section26045Fall2007 - ECONOMICS 205:...

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ECONOMICS 205: PRINCIPLES OF MACROECONOMICS FALL 2007 MARK MOORE MIDTERM EXAM 1 (M-W Section: 26045) The exam has 70 points available. You have 75 minutes to complete it. Write your answers in ink in a bluebook. Write your name, student ID, and discussion section (TA and time) on the bluebook. BE SURE TO EXPLAIN YOUR ANSWERS. Consumption and Aggregate Demand 1. (15 Points) a. Draw an AD-AS diagram for the economy. Make sure to label the axes and curves. b. In your AD-AS diagram, show the normal situation of ongoing growth in the economy. In other words, show how the curve or curves tend to move over time. What tends to happen to the price level? What tends to happen to real GDP? c. With reference to your diagram, explain in words the circumstances under which the economy experiences faster than normal inflation. Do not draw a new diagram for this part. Answer in words. 2. (12 Points) Consider the consumption function. a.
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This note was uploaded on 02/13/2008 for the course ECON 205 taught by Professor Kamrany during the Spring '07 term at USC.

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econ205Midterm1Section26045Fall2007 - ECONOMICS 205:...

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