AKforSecondMid

AKforSecondMid - Midterm Exam#2 Econ 102 Winter 2008 Andrew...

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Midterm Exam #2 Econ 102, Winter 2008 Andrew Hollenhorst Problem A1 FALSE. According to the quantity theory of money MV = PY assuming that M and Y are unchanged, if V decreases then P must decrease. Problem A2 FALSE. Consider the Keynesian cross. Recall E = MPC ( Y ± T ) + I ( r ) + G E curve. For a given increase in the interest rate, and thus a given E curve produces a smaller change in GDP. This produces a steeper IS curve. Problem A3 TRUE. When money demand is insensitive to changes in interest rates it is relatively steep. When income increases the demand curve shifts right by a ±xed amount and interest rates rise by a large amount compared Problem B1 The expression is given by U t +1 = sE t + (1 ± f ) U t U t +1 = s ( L t ± U t ) + (1 ± f ) U t where the ±rst term represents the number of employed workers who separate from their jobs and the second term the number of workers who don²t ±nd a job. To go from the ±rst equation to the second we use the identitiy L
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This note was uploaded on 04/03/2009 for the course ECON 102 taught by Professor Serra during the Winter '08 term at UCLA.

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AKforSecondMid - Midterm Exam#2 Econ 102 Winter 2008 Andrew...

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