Part 1: Definitions 3 points each 1Permanent Income...

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1 Name: Economics 320L, Fall 2015 Midterm 2 Please put all papers away. No calculators, no cell phones, no computers: nothing electronic is allowed. The exam is scheduled for 80 minutes. There are 60 points total on the exam. Part 1: Definitions (3 points each) 1)Permanent Income Hypothesis: 2)Phillips curve: 3)Stagflation: 4)Monetarism: 5)Inverted yield curve:
2 Part 2: Long Question on AS-AD Model (15 points) Comparative Statics of a Decrease in Money Technology (MT) Show what our AS-AD model predicts will happen to the variables in the table below in both the short-run (SR) and long-run (LR) in response to a decrease in MT. Show all of your work. No points will be awarded for unjustified answers. Use back of page if necessary. All graphs should be fully labeled. P Y r C I W/P N SR LR
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