Simulated_2nd_Prelim_S_2008 - Econ 314-1 S 2008 Simulated...

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Econ 314-1 S 2008 Simulated Prelim 2 04022008 Do one out of (1) – (3) and all the rest (1) (20%) The sub-prime crisis has: (a) reduced the willingness of the banks to lend thus shifted the IS curve to the left (b) reduced the willingness of the banks to lend thus shifted the LM curve upward (c) reduced the households’ willingness to spend, thus shifts the IS curve to the right (d) none of the above effect (e) all of the above effect (2) (20%) According to Lucas (a) if business cycles are not recurrent events, money cannot be non-neutral (b) if business cycles are cyclical, money cannot be neutral (c) monetary policy can be a policy tool to control cyclical disturbance (d) the IS shocks form the basic cause for the observed cycles. (e) government policy cannot affect the behavior of the economic system as revealed by econometric studies. (3) (20%) From the system, ∂I/∂r dr - ∂S∂r dr - ∂S/∂Y dY = 0 [∂(M/P) / ∂M]dM + [∂(M/P) / ∂ P] dP = [∂L/∂Y [ dY + [∂L/∂r ] dr
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This note was uploaded on 10/08/2008 for the course ECON 3140 taught by Professor Mbiekop during the Spring '07 term at Cornell University (Engineering School).

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Simulated_2nd_Prelim_S_2008 - Econ 314-1 S 2008 Simulated...

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