Section II - Problem Set V - Answer Key.pdf

Section II - Problem Set V - Answer Key.pdf - Middle East...

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1 Middle East Technical University Fall, 2016 Department of Economics ECON 202 Section 2 Instructor: Dr. Pınar Derin - Güre TA: Özgen Öztürk Due Date: Thursday, December 29, 2016 in Room A211 (until 17:00) . No late problem sets will be accepted. MULTIPLE CHOICE ANSWERS WILL BE HANDED IN USING THE OPTICAL FORMS. PLEASE FILL IN YOUR OPTICAL FORMS WITH FULL CREDENTIALS (i.e. NAME and ID). OTHERWISE YOU WILL NOT GET ANY POINTS FROM MULTIPLE CHOICE PART. EMPTY OPTICAL FORMS WILL BE HANDED IN CLASS ON WEDNESDAY , or YOU CAN OBTAIN FROM ÖZGEN’S OFFICE (A211). PLEASE WRITE YOUR ANSWERS IN A SEPARATE PAPER. Note: Please keep your answers short ! In most cases two or three sentences will be more than enough. If your answers are too long or contain obviously irrelevant information you may incur a penalty, i.e. brevity in your responses is strongly recommended. If you would like, you may work in small groups of 2-3 people to discuss the problem sets. However, you must write up answers individually. If you decide to work in a group, please list the names of the group members on your problem set. A note on academic integrity: As the syllabus clearly states, work that you hand in should be your own work: “A student shall not submit work […] that is not the result of the student’s own effort.” Please show your work for full credit on analytical questions, i.e., show the formulas, calculations (if appropriate). Do not report only the final answers for the essay questions. PART I - MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) When inflation has not been very persistent, as was the case in the United States before the mid-1960s, we can expect that A) the expected price level for a given year will equal the previous year's actual price level. B) lower unemployment rates will be associated with higher inflation rates. C) the current inflation rate will not depend heavily on past years' inflation rates. D) all of the above E) none of the above 2) Which of the following assumptions best characterized the assumption about how individuals formed expectations of inflation by the early 1970s?
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