ECON 100B FALL 2008 MIDTERM 1

# ECON 100B FALL 2008 MIDTERM 1 - Name SID Discussion Section...

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Fall 2008 (Exam #1) Econ 100B 1 of 8 Name: ____________________________ SID: _____________________________ Discussion Section: ________________ GSI:______________________________ Economic 100B Macroeconomic Analysis Professor Steven Wood Fall 2008 Exam #1 ANSWERS Please sign the following oath: The answers on this test are entirely my own work. I neither gave nor received any aid while taking this test. I will not discuss the questions on this test until after 5:00 p.m. on October 2, 2008. ______________________________ Signature Any test turned in without a signature indicating that you have taken this oath will be assigned a grade of zero. Graph Instructions When drawing diagrams, the following rules apply: 1. Completely , clearly and accurately label all axes, lines, curves, and equilibrium points. 2. The original diagram and any equilibrium points MUST be drawn in black or pencil. 3. The first change in any variable, curve, or line and any new equilibrium points MUST be drawn in red. 4. The second change in any variable, curve, or line and any new equilibrium points MUST be drawn in blue. 5. The third change in any variable, curve, or line and any new equilibrium points MUST be drawn in green. Do NOT open this test until instructed to do so. Good Luck!

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Econ 100B 2 of 8 A. Multiple Choice Questions . Circle the letter corresponding to the best answer. (3 points each; total of 30 points.) 1. Which of the following would lead to a decrease in the marginal product of labor for every quantity of labor? a. An increase in the real wage. b. A decrease in the real wage. c. A beneficial supply shock. d. An adverse supply shock. 2. A sharp decrease in stock prices makes people much less wealthy. If the main effect of this decreased wealth is felt on labor supply, what happens to current employment and the real wage rate? a. Both employment and the real wage rate would increase. b. Both employment and the real wage rate would decrease. c. Employment would increase and the real wage rate would decrease. d. Employment would decrease and the real wage rate would increase. 3. If consumers believe that next year a recession will occur, then the real interest rate _______ and investment _______. a. Decreases; decreases. b. Decreases; increases. c. Increases; increases. d. Increases; decreases. 4. If the United States had a capital and financial account deficit of \$50 billion, we could say that the U.S. had: a. Net imports of \$50 billion. b. Net foreign borrowing of \$50 billion. c. Net foreign lending of \$50 billion. d. A current account deficit of \$50 billion 5. When a temporary beneficial supply shock hits a small open economy it causes the current account to _______ and investment to _______. a.
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ECON 100B FALL 2008 MIDTERM 1 - Name SID Discussion Section...

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