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14.02_quiz1_sp2008

# 14.02_quiz1_sp2008 - 14.02 P r i n c i p l es of M a c r oe...

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14 . 02 Prin c ipl e s of Ma c ro ec onomi c s Spring 2008 Quiz 1 W e dn e s day , Mar c h 5 7:30 PM 9 PM Pl e a s e , an s w e r th e following qu e s tion s . Writ e your an s w e r s dir ec tly on th e quiz . You c an a c hi e v e a total of 100 point s . Th e r e ar e 6 multipl e - c hoi ce qu e s tion s , follow e d by 2 fr ee r e s pon s e qu e s tion s (on e w e ight e d 30 / 100 point s and on e w e ight e d 40 / 100 point s ) . You s hould r e ad all of th e qu e s tion s fir s t . Th e r e i s a blank pag e atta c h e d at th e e nd of th e quiz to b e u s e d for s c rat c h pap e r . NA M E: ________________________________________________ M IT ID NUMB ER: ________________________________________________ T A: ________________________________________________ C L ASS TIM E: ________________________________________________ E M AIL: ________________________________________________ (Table is for corrector use only) 1 2 3 4 5 6 Total Multipl e Choi ce Qu e s tion s Long Qu e s tion 1 Long Qu e s tion 2 Total

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2 Multipl e Choi ce Qu e s tion s : Cir c l e Only On e An s w e r (5 Point s e a c h) 1. Larger flows from unemployment to employment imply that a) The unemployment rate is smaller. b) The average time workers remain unemployed is smaller. c) Number of unemployed people is smaller. d) The number of people out of the labor force is smaller. ANSWER: 2 2. When the propensity to consume out of income is higher, the impact that taxes will have on output is a) Higher, due to the multiplier effect. b) Smaller, due to the multiplier effect. c) The same, because taxes don’t affect consumption. d) Ambiguous, since the multiplier effect and the direct effect of the propensity to consume work in opposite directions. ANSWER: 1 3. The inflation rate implied by the CPI (consumer price index) may be different to that implied by the GDP deflator because: a) Taxes make consumption different from production. b) The growth rate of nominal GDP is different to the growth rate of consumption. c) Some goods that are produced in the economy are exported. d) Savings make consumption different from production. ANSWER: 3 4. When the LM curve is steeper, a) An increase in taxes has a bigger effect on output. b) An increase in taxes has a smaller effect on output. c) An increase in taxes has the same effect on output. d) It is ambiguous whether monetary policy will have a bigger or smaller effect on output. ANSWER: 2
3 5. If the price of a bond goes up a) The interest rate paid by the bond goes down. b) The interest rate paid by the bond goes up. c) The interest rate paid by the bond is the same. d) The face value of the bond goes up. ANSWER: 1

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14.02_quiz1_sp2008 - 14.02 P r i n c i p l es of M a c r oe...

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