EQ5 - EC102 Quiz 5 Elena Quercioli Louisiana became the...

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EC102 Quiz 5 Elena Quercioli April 30, 2007 Clearly indicate a first choice and a second choice. If your first choice is right, you get 7 points. If your second choice is right, you get 2 points. If both are wrong, you get 0. If you are unsure, guessing is your best option. 1) Link up the following people and concepts, listing in the central column: A LR supply in micro vs. macro 7 1 Price shocks have real effects B The interest rate 4 2 Less versus more elastic C Inflation & GDP move together 6 3 Adjusts slowly versus quickly D Fiscal versus monetary policy 9 4 Rises when aggregate price rises E Long run versus short run AS 2 5 Helps AD more in bad times than good F Unemployment insurance 5 6 Phillips Curve G Crowding out 8 7 More versus less elastic H Good versus money market 3 8 Interest rate effects undo fiscal policy I Sticky prices 1 9 Congress versus the Federal Reserve 2) The British pound has been appreciating lately, and on April 17, it surged through $2. In other words, the U.S. dollar is now worth only 50 British pence. Then we can conclude for the USA in the short run that: a. Prices, output and the interest rate should rise b. Prices and output should fall, and the interest rate should fall c. Prices fall, output should rise, and the interest rate should rise d. Prices should rise, output should falls, and the interest rate should fall e. Prices, output and the interest rate should fall Louisiana became the 18th state of the USA on April 30, 1812!
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3) If Congress sucessfully ends the war in Iraq, by overturning an expected Presidential veto, then we can conclude for the USA in the short run that: a. Prices, output and the interest rate should rise b. Prices and output should fall, and the interest rate should fall c. Prices fall, output should rise, and the interest rate should rise d. Prices should rise, output should fall, and the interest rate should fall. e. Prices, output and the interest rate should fall 4) Suppose that a drought in the Midwest kills the harvests of corn, wheat, and other grains this summer. A few months later the Federal Reserve accomodates the negative shock, by increasing the money supply. Then: a. Initially, prices rise and output rise, and after the Fed comes in, prices rise further, and output rises more b. Initially, prices fall and output falls, and after the Fed comes in, prices fall, and output returns to its initial level
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EQ5 - EC102 Quiz 5 Elena Quercioli Louisiana became the...

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