2004PRELIM1_ANS - s PART II ESSAY#1 1 Budget Deficit =...

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Sheet1 Page 1 2004 prelim1 Answers 1. A 2. C 3. D 4. B 5. D 6. A OR B 7. A 8. C 9. B 10. B 11. B 12. C 13. C 14. B 15. D 16. C 17. A 18. fall 19. $20,000 20. C 22. One example is fixed income earners. For instance, the elderly who receive a fixed pension every month and hence inflati o 23. The expansionary tools of the government have limits. Not only output will not grow forever due to productive limitations, b u 24. No. An initial increase in money supply of 50 million dollars will have a larger effect on the total final supply of money due t o 25. False. Banks actually create money by making loans out of its excess reserves. These loans are the reason why an increa
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Unformatted text preview: s PART II ESSAY#1 1. Budget Deficit = Government Expenditures - Taxes 2. Keeping the budget deficit low will imply cutting on government expenditures and/or raising taxes. Both actions reduce agg r e 3. SEE SHEET ESSAY #2 1. GDP= C+I+G+(EX-IM) -Exports to China have increased-Investment has increased due to business cycles Inflationary monetary policies that favor borrowers (Japanese firms) has also freed up investment since firms have to pay bac k 2. SEE SHEET 21. No. Buying used goods do not help raise todayhs GDP, since GDP accounts only for goods produced this year using facto...
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This note was uploaded on 04/03/2008 for the course ECON 1120 taught by Professor Wissink during the Spring '05 term at Cornell.

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