2006_prelim2_MAKEUP 25 April2006

2006_prelim2_MAKEUP 25 April2006 - Name: Section Number:...

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Name: Second Prelim ECON 102 – 25 April 2006 Section Number: This exam has 20 multiple choice questions, 4 short answer questions and 2 essay questions Part 1: Multiple Choice Questions One point per question. Write the answers on the separate sheet provided. 1. An increase in oil prices, such as the oil shocks in the 70s, lead to _______ thereby causing ________ a) a movement along the AS curve; cost-push inflation b) a leftward shift in the AS curve; demand-pull inflation c) a rightward shift in the AS curve; cost-push inflation d) a leftward shift in the AS curve; cost-push inflation Answer: d 2. In the 1930s, when Keynes was alive, a expansionary fiscal policy, taking everything else constant, would have led (in the short-run) to________ a) a relative large increase in Y, a smaller increase in P b) a relative large increase in P, a smaller increase in Y c) both Y and P increasing with an percentage d) only Y increased Answer: a 3. If the aggregate supply curve is vertical in the long-run, _______ has (have) an effect on the aggregate output in the long run a) sometimes monetary and/or fiscal policy (i.e. it depends) b) monetary policy does but fiscal policy does not c) monetary policy does not but fiscal policy does d) neither monetary policy nor fiscal policy Answer: d 4. Which of the following statements is correct: a) the money supply does not play a role in sustained inflation b) the Fed is “accommodating” when they decrease the money supply after the government has increased G c) inflation initiated by an increase in aggregate demand is referred to as demand- pull inflation d) in order to avoid “crowding-out” after the government has increased G, the Fed often decreases the money supply in order to lower the interest rates Answer: c 5. Employment tends to _______ when aggregate output ______ a) rise, falls b) rise; rises c) falls; rises 1
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Name: Second Prelim ECON 102 – 25 April 2006 Section Number: d) not change; falls Answer: b 6. It was an empirical fact that in the 50s and 60s the inflation rate ________ when the unemployment rate _________. Today the relationship between those to variable can be described as ________ a) falls; rises; strongly negative correlated b) rises; rises; strongly negatively correlated c) falls; rises; unstable d) rises; rises; unstable Answer: c 7. The ___________ lag for fiscal policy is generally ______ than it is for monetary policy. a) recognition; shorter b) recognition; longer c) implementation; shorter d) implementation; longer Answer: d 8. During periods of negative demand shocks, deficit target reductions such as those mandated in the Gramm-Rudman-Hollings Act would tend to: a) stimulate the economy and increase employment. b)
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2006_prelim2_MAKEUP 25 April2006 - Name: Section Number:...

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