practicequestions5spring2004

practicequestions5spring2004 - ECONOMICS 102 SPRING 2004...

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E CONOMICS 102 S PRING 2004 P RACTICE Q UESTIONS 5 T OPICS COVERED : Loanable funds market: demand and supply side Money market: demand and supply Government’s role in both loanable funds market and money market Economic fluctuations Labor market disequilibrium Aggregate expenditure and equilibrium GDP MULTIPLE CHOICE Q UESTIONS 1. From Say’s Law we derived the following identity: C+S+T=C+I+G. Does this imply that saving equals investment and taxes equal government expenditure? A. Yes B. No 2. In the loanable funds market, what is IMPLIED by a vertical demand curve for the government? A. Government does not play any role in determining the equilibrium interest rate. B. Government’s decision on the level of the deficit is not affected by the private demand for funds. C. Government does not play any role in determining aggregate demand for funds. D. Government’s decision on the level of the deficit is not affected by the market interest rate. 3. Deleted from file: Poor question 4. For the same increase in private investment (I), an increase in the marginal propensity to consume (MPC) will result in a increase in equilibrium GDP (Y). A. higher B. lower 5. Which of the following is true about the concept of complete crowding out in the classical model? a) Any change in government policy can have no effect on the economy. b)
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This note was uploaded on 08/08/2008 for the course ECON 102 taught by Professor Drozd during the Spring '08 term at Wisconsin.

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practicequestions5spring2004 - ECONOMICS 102 SPRING 2004...

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