Corrected%20Practice%20Exam%20-%20Final - EC11 2005...

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EC11 2005 Comprehensive Practice Exam TA: Nate with Kyle, Phil, and Dimitra 1 1) Interest Rates. Rising interest rates… a. …stimulate investment spending. b. …reduce private savings. c. …are the likely result when the Fed sells bonds. d. …are the likely result when Congress runs large budget surpluses. e. None of the above. 2) Macro. Stagflation… a. …is a period of falling prices. b. …relates to nominal variables, not real variables. c. …may be caused by a sudden monetary contraction. d. …may result from high producer costs. e. None of the above. 3) Elasticity. Which of the following statement does not apply to goods with relatively inelastic demand? a. Producers would bear the burden of a tax. b. Taxes would cause less deadweight loss than if demand were more elastic. c. The good is likely to have few close substitutes. d. Users are probably dependent on the good. e. Both a) and b). 4) Macro. A Federal Reserve committed to price stability will… a. …buy bonds when productivity rises. b. …buy bonds if the velocity of money increases. c. …stop allowing fractional-reserve banking. d. …sell bonds when it wants to create money. e. All of the above. 5) Discrimination. Which of the following statements is incorrect ? Laws preventing illegal immigrants from working… a. …have a negative effect on labor supply. b. …may reduce technological knowledge. c. …are not economically efficient. d. …make the market wage fall. e. Both b) and d).
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EC11 2005 Comprehensive Practice Exam TA: Nate with Kyle, Phil, and Dimitra 2 6) Wage Differentials. Which of the following do employers compensate for with higher wages? a. Hazardous working environments. b. Low job security. c. An unattractive benefits package. d. No weekends off. e. All of the above. 7) Taxes. Which of the following statements is false ? a. Taxing welfare payments causes the market wage to fall. b. In a progressive tax system, marginal tax rates are higher than average tax rates for each income bracket. c. Lump-sum taxes are bad for vertical equality because marginal tax rates slope upward with income. d. Tax cuts can stimulate consumption. e. None of the above. 8) Macro. Recessions may be associated with all of the following except : a. A low actual price level relative to expectations. b. Unexpected monetary contractions. c. Automatic increases in spending on some government services. d. Unemployment at its natural rate. e. Bad weather. 9) Monetary Policy. The Federal Reserve purchases bonds in order to… a. …stimulate aggregate demand. b. …raise interest rates. c. …prevent the economy from overheating. d. …reduce the money supply. e. None of the above. 10) Markets. Which of the following is true? a.
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This note was uploaded on 05/17/2008 for the course ECON 1110 taught by Professor Mehta during the Spring '08 term at Brown.

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Corrected%20Practice%20Exam%20-%20Final - EC11 2005...

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