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Unformatted text preview: I. Instructions 1 Time Allowed: 2 1/2 Hours 2 You may use a calculator. 3 Part I consists of 40 multiple choice questions. Each question is worth 2 points. Answer all 40 multiple choice questions by choosing the single best answer. Circle the appropriate letter on the exam. 4 Part II consists of two short answer questions. One is on General Equilibrium (2 parts) and one is on inflation. In answering each part, be sure to include your work, where possible, to receive full credit. Point allocations vary among the questions. Allocate time accordingly. 5 Write your name on each sheet of the test. 6 There are ___ pages to the test , not including the cover sheet. 7 Good luck. II. Rules, Guidelines and Expectations  Receiving or providing assistance on this exam is strictly prohibitted.  Use, during the exam, of materials other than those permitted by me is strictly prohibitted.  When you are finished, please turn in your test. If, at any time, you are found to be in violation, you will receive an "F" on the test. Academic dishonesty shall be adjudicated by the proper authority. I, _______________________________, have read the above statements and agree to the specified terms and conditions. _______________________________________ Macroeconomics FINAL EXAM: 120 Points Total sign and date print your name neatly in the space provided Name 1 Circle the single best answer to each of the following 40 questions: 1. An increase in currency in circulation combined with an equal decrease in savings account deposits would: a. increase both M1 and M2. b. increase M1 but have no effect on M2. c. decrease both M1 and M2. d. decrease M1 but have no effect on M2. 2. A country suffers huge damage to the nation’s capital stock when the economy is initially AT FULL EMPLOYMENT. Fortunately, no lives were lost. You may assume that the price effect dominates income effects. What are the macroeconomic effects of such an event? a. Deflation occurs, interest rates rise, the price of bonds declines, both investment and consumption are ambiguous, nominal wages rise, real wages decrease, employment decreases. b. Inflation occurs, interest rates fall, the price of bonds rises, both investment and consumption decrease, nominal wages rise, real wages fall and employment decreases. c. Inflation occurs, interest rates rise, the price of bonds falls, consumption and investment are ambiguous, nominal wages rise, real wages fall and employment decreases d. Inflation occurs, interest rates rise, the price of bonds declines, both investment and consumption decrease, real wages decrease, employment decreases and nominal wages decrease e. None of the above 3. If the reserve requirement is 15 percent and a customer makes a new cash deposit of $50,000, how much new excess reserves are created?...
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This note was uploaded on 05/23/2010 for the course ECON 102 taught by Professor Payan during the Spring '09 term at Glendale Community College.
- Spring '09