2007 FALL TEST 3-2A

# 2007 FALL TEST 3-2A - TEST 3-2A ECO 2013 Fall 2007...

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4. Consider an economy fully described by the equations C = 2.5 + 0.5Y I = 0.8 + 0.1Y G= 3.0 + 0.0Y NX= 0.7– 0.1Y For this economy, the multiplier is a. 0.5. b. one. c. 1.5. d . 2.0. e. 5.0. 5. An exchange rate was €0.80/\$ on October 10, 2006 and _____ on October 10, 2007. Other things the same, this change in the exchange rate shifts the AE line on the U.S. 45º diagram _____. a. €0.71/\$ … down b. €0.71/\$ … up c. €0.91/\$ … down d. €0.91/\$ … up e. The question errs. The exchange rate between the euro and the dollar is constant. 6. From October 2006 to October 2007, the price of oil _____ by 37%. Other things the same, this shifts the AE line on the 45º diagram _____. a. fell … down b. fell … up c. rose … down d. rose … up 7. According to the efficient markets hypothesis, if the stock market fell by 10% over the past month, you should expect the stock market to _____ during the coming month and the dollar to _____ during the coming month. a. fall … depreciate b. fall … appreciate c. rise … depreciate d. rise … appreciate e. The question errs. The efficient market says you what the stock market did last month tells you nothing about what either it or exchange rates will do during the coming month. 8.
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2007 FALL TEST 3-2A - TEST 3-2A ECO 2013 Fall 2007...

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