Economics 1 - Fall 2001 - Brown - Midterm 2

Economics 1 - Fall 2001 - Brown - Midterm 2 - is...

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Unformatted text preview: is soilmnIrFALLaIeseut Department of Economics, UC Berkeley F'rof. Clair Brown Econ-amiss ‘I, Fall 2001 Noyernber 19. Eflfl'l EGDNUMICS 1: MIDTEFIM EXAMINATIDN #2 PART A DD NUT DFEN THIS EXAM EDDKLET UNTIL EMSTHUGTED TD DD SE}! INSTRUCTIQMS: 1. This is a closed-book, closed—notes, no-calcuiator exam. 2. Please turn off your cellphone! 3. Be clear, complete and concise in your explanations. 4. ifou may use the backs of these pages, if needed, as scratch paper; however, you will MDT be graded on anything written on the backs of pages. Therefore... 5. Limit your answers to the space provided. [ m. 'y'iolatichs of the Gods of Student Conduct The Chancellor or his or her designoe may impose discipline for ylclatich of. or an attempt to violate. i any university policy or campus regulation. mic, or policy. including those actiyities proscribed in this - Code of Bend uct. The following types of conduct are specifically prohibited: | l ! Et. Academic ir'iolations i. Cheating. Ch eatlng is defined as fraud. deceit. er dishonesty In an academic assignment, or using or attempting to use materials, or assisting others in using materials which are prohibitod or inappropriate in the context of the academic essig nmettt in question. This Includes, but is not iimited to: a, Proyiding answers to or receiying answers from others for any academic assignment. In "group assignments' and "scope ratitre learning' situations. It Is the responsibility of the student to ascertain from the instructor to what degree the work must be done exclusiwa by the student or may be done in collaboration with bthcra: in. Using notes, information, calculators. or other stsctronic dsyices or crop rants during exams or for assignments from which they hate been expressly or implicitly prohibited: .3. Improperlyoljlalnlng or uelng improperly obtained intcrmaticn about an exam or assignment in adyance of lls ayallabllily to other students, or assisting others in doing EU; I: d. Putting one's name an another etude nt'a exam or assignment; er e. Altering previously graded wcrit for purpose of seeltlng a grade appeal. ‘t’our Name a side: _ Tfir‘e Name st Section: : _ [4:1 Department of Eoonorntos. UC Berkeley Prof. Glalr Etrown Eoonorhiee 1, Fall 20m Noyen'tljer 19. 20131 1. state whether each statement that Iollowa is True, False. or Uncertain; and Explain your answer in two or three ehort eente noes- Define or explain the oonoept as asked. Inelude formulae where appropriate to Illuetrate your answer. No graphs are needed. [5 points each, 15 polnte total} a. If tooth the potentlel lender and the}: tential borrower oorreotly antloipate the FIATE GF .' .h it :9 INFLATIGN: inflation will not r flfi-the‘wealth [mm the teditor to the debtor. 0d 1r“) l‘ H ' ellne rate of inflafiehTLé‘ [gfiflLeqjg In... III-L cafifl Ir; a: if fir-UPLES Ffeh‘? ggegaro Eretf‘r'; [jg-star”? deferrmfif Ueflfit‘wfli'rn-Fl' HP“. J”;— fiftl'a-‘I‘ftth. “W”: WM lee. - I F he. Malawian Maj-F Parrectlry ti afielpateciby leaderend (316571—6113 He [at mhenfiwp‘f‘fill‘ed W315“ 737E. firenl rut-L eFt Jamaal Fa exang a5 {Jamar/341153 ffijfiflé$FWr .-' ‘5‘..- CL '- {U Ill I q ? ___.-"II If y if. \ El r—a all: r—-. PreaoaaESQE1é-- _e_—---- I I{\aJee-tflirhen firrne' aotual inyeatrne nte are less than their planned inyeethtents. the economy's we ran DP deereeeee. . nned lnyestment: a air 1“ ,1 e315ng- fflf ---.£xpla[n the difference between aetuel and P I1 II: 43.}? fl L1 “lbw M L1 '5 I": tTHWIgJ“ V, ‘E‘? ffhtflfi'fi |I. Edit? - , - dirtqhhut t‘nuej__1LW—f‘1fl._5_a_ _Wlatarrolgal gmqoe+ge?a'te§?t7en M" I, x Frill-je‘TH QDP onlyfikéfi'flfmwfimfi eetael‘ 'LI' thoefitmhfiy randy—{ha Fffl'hJ—fltf‘fh We“ er'eu'red Efij}: Hun-Mug: r' o. GWEN; Fleal GEE? per person grew at 2% oyer the past 50 years in the UK and US. Thle means that ayerage labor produotlyity grew at the same rate 'In both oountrles those ED yre- w. Explaln the relatio nshlp between real :3 per person and average Iteller prod uethrlty .-'""' he . ' '- 5’ l_ -.__1-Gfi l {a [3 F Plan r Err; 'lIt’T 15.” gr ‘Ir‘ lt'l‘a‘ o L; ~11L r+tehénmuz - - t P fffit‘l flu Irfitgideflf'af‘ Eeofie I __ I _1'¢:-tbe,r’ F‘I'dll. ||.' l are Weatmgwrm _ m1 LI'tJ' r Ufiflgr+uin_ Ufilfigr 'EaEr-‘t' r31 relot‘nfitlfl flfnflffifl {erst- r—fll‘ag‘ t'e Feefitfiiflfif 1+tt3fiererra Jeetrfmgfl + “wear-War wee Page:th u _ mirfllfl‘tdihf‘h- up.) dwime FEE; 9- 5%} e {have Weider media» {:1 $3! I... f.- __..|' I «.11 refine, Ed I" .u'f “P II @filhgfifia I: F%——I’Z ‘3“ _.'| ,4! .-' Peggy“! “a.-__-.---" “he +3.}: Department at Eccncimies, Lil: Elerlteley Prat. Blair Brawn Eccncrnies 1, Fall EDEN Nevernber 19, 2001 2. A hypothetical ecsnemy is described as fellows [yartaeles are as usecl in tenteeeir}: [as paints} G =E+ awn] — air: where “its is dispesabia ineema r” =T- er G = E T =? Nit = a. a- Give the basic fcirrr'rula fer calculating. All Then, an lestltuta the EDD-VG: mcdified sq uat'rarrs far It: and | Into this fem-rule. Simplify your aquaiien. grouping tin-gather terms that are part at sutenemeus All Hess -_ ti. Sclye fer shsrt-run equililrbrlung clutput. [=1- paints} 1 __ Hill-flu crud: fin— .. if Jail-Fish ,‘Cy szo mgr r" —-L_ "" -- _... £55: 3"“:- rtffe-fif ‘L__[_% x..__ Y: P: (C‘CT-JI-I-l-{gh [EFHO I.) its. "If" c.- if MFG = 35. what is the multiplier? Shaw the farmuls yeu use te calculate the multiplier- Heir-r much does ‘r' Increase ii gayernrrrent sending increases by It}? [4 points} »,.'_:'r.~.x I - _, i _ i .r" "“-.._$""“ii" WH—leflfif—lefiq r' r i_ iI 'r iIFJ'GVErP’th—;PEH’”3 iHCPflM-‘flfilj Ilia}. Y {int £535" -"i" r ' _ ' FEE " ' f is {lewd-i ca. IKE-J '1 If aumnflmflus AD = “3'10. i“ = J31, {e + in] = ‘lflflfl. and ‘1” = 364D. is there an IZILEiFI'LFi gap? Include the magnitude ef lite gap 3: Il-rhether it is recessienary er expansicnary. {B paints} H _..; liffiTllE'{.AhD“r[ai-ED If; -' "91’:L-r(rare—redresejyflrsrmsstryese if "i K?» _,.r _ fl _ __l EKPGHB iflhflr}. flufquf'flefi ' Ran-ff; 5) =Et's‘it3 hi0 i3— 3 e. Caleulate the Icing-run equilibrium r- [=1- paints} __ Xi“: {es D‘r (s49) géqflf‘tflflrfleiemr) Ii lief-ii "2WD *—" [file fleet-3,4 HM [£313 a '“—"’ r5fl.[ gr I CU". .._r- Department of Eeencmica. UC Elerlteley Pref. IClair Eirow'n Economics 1, Fall EDEN - - - November 19, EDEN ECDNDMIGS 1: MIDTEFtM EKAMINATIDN #2 PART B DU NUT OPEN THIS EXAM EDDKLET UNTIL INETHUCTED TD DD SD! INSTHUETIDNE: 'i. This is a closed-book, closed-notes, ne-calcuiatcr exam. 2. Please turn etf your cellphone! 3. Be clear, complete and concise in your explanations. 4. You may use the backs of these pages, if needed, as scratch paper; however, you will MDT be graded on anything written on the backs of pages. Theretore... 5. Limit your answers to the space provided. ' III- viola1ions of the Code of Studeni Conduct The Chanoeiler or his or her designoe may in! pose discipline for violation of, or an anempt to violate, any University policy or camp us regulation, rule, or polioy, inoluding those activities proscribed in this - Code of Conduct. The following types of conduct are specifically prohibited: B- Academic IIil'iclatiens 2. Cheating- Cheating is dElfiiiEld as item. deceit. or dishonesty in an academic assignment, or using or attempting to use materials. or assisting others in using materials whioh are prohibited or inappropriate in the co ntest of the academic assignment in question. This includes. but is not limited to: 3. Providing answers to or receiving answers from oth era for any academic assig rims-hi. In 'group assignments" and 'eeoperative Iearnin g" situations, it is the responsibility of the stud ant to aspartain from the instructor to what degree the work must lee done exclusively by the student or may be done In collaboration with o’rJ'I ore; in. Using notes. info rmatio o, calculators. or other electronic devices or programs during exams or tor assignments from which they have been espreser or Impllollty prohibited: c. Improperly obtaining or using improperly obtained informatlon about an exam or assignment in sovanoo of its availability is other students. or assisting others in doing so; d- Putting ene's name on sin oth er student's exam or assignment; or | c. Altering previously graded work ior purpose of seelting a grade appeal. ‘r’our Marne S. sioe: TA's Name a Section: .43 1 f2 Prat. Elair Brawn NDU-Ei‘l'l bar 19, 2001 Department at EDUFlCIm-IEE: UC Berkeley Eeenemies 11 Fall 2001 3- Alan Green span and the Federal Reserve Beard believe the LLB. spend my is in a reeessien. The Fed deeides re use epen market pperatiens te ehan ge the rn-aney supply re achieve its gpals at full emplpyment wilhaut inflatien. til} peintstptalj a. Weuld the Fed want 1e expand pr epnltaet the meney su pply? Explain haw the Fed weuld implement "a pen marltet eperatiens" tp aehie-re 1h a1 gdal. t4 paints}: TH”— EECJI Wneltf W33”? "hi airlift-aan mflfljiafififw thereby intent-11TH? firet’Jl—h WHH it}er 'Ifi-Ffflg'f‘lfl—ES} Vi megpdnflfla feather, suier HE Fad MT“ MEGFhHméEJ? pWFi-plj'as' er be.er Lav-Eli reliant finer-.35 fires; Pflplg, 1:. Explain haw the Fed‘s aetiens weuld lilter affect the eemppnents at All Us the graph at right. preside a Keynesian Crass diagram td illustrate the eileets at the Fed's belliesI an AD and equilibrium “1"- v” Label priginal equilibrium 1'3. with .I"=5‘}i': and ‘1" 4 Label new equilibrium B with 1‘ and “t” 5 Label art-as. {E3 paints] FR D inr u-rte EEF‘Fflr all Y} Eli-tie. (/l L—aflkhlhififi’i} F'fli'as' has? {jh wharf; «E £1" [Ha tiling Tesla-lea. flEiMsThtfe 4. Define Federal Funds Flate. What is Fed's eurrenttargetfdr Federal Funds rate“? Haw dees the Federal Funds Flate difier harm the Disseth Fiate? {a paints} Federal Funds Platinum-- Era-1 FUH Ff: rail—E J' ih—JEiI_H-S77mé* bald-Ff {'IHIIL-qbc. E-flqu Wiper Ft I‘- flbidr‘} Fern-‘1 PM}; le warfflfi. U1 Failifi r: erree+~¥iw-fje§flr Fee-Ing Thai-mire! F5 3;: hair? “fli’i'i‘i'it t he D Fiend (Mir-e the wares release: rate t; hri‘t'rjaj' law-rfi—S'fi #17:} - . WEI/a Department ef Eeenernies. UC Elerlteley Pref- Clair Erewn Eeenerniee 1: Fall EDEN Nee-ember 1%, 2-001 e. Fer each at the fellewing- use an AID-AS diagram 1e shew the ahert—run and lung-run efieets en eutput and infletiert. Assume the eeenerny alerts In leng-run equilibrium In eeeh easegyfi eelnteL‘fl/w LRPI . a. An Increase in autenerneus eeneumetien by 10 1“ I I F [IN-Id In this sltuetieh. Irg fieee fieliey Isle yeu reeemrn end? /I'Lfl«it"€‘ilt‘i fire 5w Explaint Jeni-run eme etyeur peliey. {E peinte} L! LI get" -. .-" I fact. HM ‘& _...__1.1_.r—..‘5R.I“I'j- 5R3; Cl fill Half-F?_LIIEMHII}?I r I EECK Ilnrl'l'quflg-DSJHUr-l by {1,3,5 rah}: PHI—“I'J'Hfl. thfflhflhmti'eet-fl' qU+-FLJ:I"WJH 1+IJI'CIIHUHFHE-15W:J_H third“ PI m, at "H frisaj‘iel ie. A deereaee in '1" because at lerre risrn. In the leng run. new eeee this situetlen differ treh-i the mass er a share Inerease in eiI [Jriees’i' til eeints] IF"! flhj r'LAr—I I {ah TS-j-gl-Iuflf‘linn 4me th'fsu'j Gm} in (hearse: fierFIUJflflt‘irj e 5h armrest: rs as Pacereerasimmfl J}, eve-«J's [Hagagfiwjflrflfl IeFlsf-rm 5A? and tits: r asset} nfiéalm er] PI...th +11% 1 Eift'l'tllh'ta‘ Wmm F’Erlefh‘}fl F‘i‘fflhf'i'rrJI-I fiat-“1!;- 3HE T{tr-Tit gimirerfipee M at I‘qFIatLFrh firm: #1 T 1's; i s Whrgplu share: toilette-emf eefeui‘tfifrlaafell mflbflgflggmfip . iteyelieal una eyrnent Is 2%, what is the euteut gee? Hew ee ye knew? Heft.- Ltse 03:1? Law. {2 eeints) n HIT: Hie: “I? _ akhfjfw _- a EUEF'LJT If“ fiFcyfl-rrmr H ._F1{Plljw&fl%rfin—¢ffljhfejfi fl' Z El-rhi-PU'13‘JFL . Preside ene-wertl er ens-n urn'eer answers te AT LEAST lIZINE et the fellewing eueetiens. Any seditlenal eerreet answers will lee awarded he nus paints. [1 eelnt eaeh} a. What was the unemeteyntant rate in. Deteber? 5' “19$ e. H-flw much did ereeueer eriee ihees ehange in September? d I _E,fi's Li e. Hew mueh ditl GDP ehertge last quarter [03]? ._.. E} f H firm cl. Did the grew‘th in the sales el existing heusea in DE add te GDP? If] tillr tflihlt1 HEWHsWflIe QI'E-I-H EDP enlar- I ...
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Economics 1 - Fall 2001 - Brown - Midterm 2 - is...

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