Econ303 Midterm Exam Solution

# Econ303 Midterm Exam Solution - Econ 303 Midterm Solution...

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Econ 303 Midterm Solution Spring 2009 1. D (Choice B is not the subject for macroeconomics, both A and C are the subjects covered in macro.) 2. A (Borrowers, homeowners with mortgage, and students with student loans will benefit from the rising inflation rate. So the correct answer is A.) 3. D (Empirical question ) 4. C (Macroeconomics is trying to smooth the economy via dampening business cycle. “Keep the economy at its maximum productive capacity” is not accurate argument .) 5. D (By definition of textbook.) 6. E (Real unemployment rate is below the natural unemployment rate, so actual real GDP should be above the natural level, which may drive the inflation to speeding up.) 7. E (Empirical question ) 8. C (Steel produced this year is not used to produce a car sold this year, so B is not correct. Steel is sold via market but not resold this year. So it should be included into GDP for this year as increasing the inventory for next year.) 9. A (B, C and D are not necessarily true when the economy is in equilibrium. A is an expression for magic equation.) 10. A (((130*0.05+270*0.03)/(100*0.05+300*0.03)-1)*100% = 4.3%) 11. D (((130*0.06+270*0.04)/(100*0.06+300*0.04)-1)*100% = 3.3%) 12. D (By chain rule, sqrt(4.3%*3.3%)=3.8%) 13. D (“Discouraged workers” are considered not in the labor force, since they did not satisfy the

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## This note was uploaded on 04/06/2009 for the course ECON 303 taught by Professor Zhao during the Spring '08 term at University of Illinois at Urbana–Champaign.

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Econ303 Midterm Exam Solution - Econ 303 Midterm Solution...

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