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Second Prelim ECON 3040, Fall 2015 You have 1 hour and 15 minutes to finish the exam. I will answer questions for the first 15 minutes of the exam, after that no more questions of any type are allowed. Hence, read the exam thoroughly and fully before writing anything. The Exam will be graded using the points described in each question. There are 100 points in total. If you disagree with your grading of any of your answers, you can dispute your grade by sending me a written request making your case. After that we will arrange for you to drop off your exam for revision. At that point the whole exam will be graded again. Here are some conditions that you may find useful. •Flow equation for equilibrium unemployment rate, 𝑠𝑠(1− 𝑢𝑢) =𝑢𝑢𝑢𝑢𝑢𝑢(𝑤𝑤∗)•Money supply conditions, 𝑀𝑀𝑠𝑠=𝐶𝐶+𝐷𝐷, 𝑀𝑀𝐵𝐵=𝐶𝐶+𝑅𝑅, 𝜌𝜌𝐷𝐷=𝑅𝑅, 𝑐𝑐𝐷𝐷=𝐶𝐶•Money multiplier, 𝑀𝑀𝑠𝑠=1+𝑐𝑐𝑐𝑐+𝜌𝜌𝑀𝑀𝐵𝐵•Money velocity,𝑉𝑉=𝑃𝑃𝑃𝑃𝑀𝑀𝑑𝑑