201Mid02Fall2

201Mid02Fall2 - Econ 201 Prof. Gordon Fall 2002...

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Econ 201 – Prof. Gordon Northwestern University Midterm #2 Fall 2002 Department of Economics November 11, 2002 Name_______________________________ Student # ___________________________ Please circle one : TA : Etienne Ron Section : Tu. Th. The following is a closed material (though, open mind) exam. Calculators are allowed. As a reminder, the exam is graded by humans, so write as NEATLY as possible. Good luck! PART A (Multiple choice, 1 pt. each, 30 pts. total) Choose the one alternative that best completes the statement or answers the question, and report your answer in the table below. Question Answer Question Answer Question Answer 1 _____ 11 _____ 21 _____ 2 _____ 12 _____ 22 _____ 3 _____ 13 _____ 23 _____ 4 _____ 14 _____ 24 _____ 5 _____ 15 _____ 25 _____ 6 _____ 16 _____ 26 _____ 7 _____ 17 _____ 27 _____ 8 _____ 18 _____ 28 _____ 9 _____ 19 _____ 29 _____ 10 ______ 20 ______ 30 ______
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1. Net taxes are a) the difference between taxes paid to the government and government spending. b) taxes paid to the government minus transfer payments. c) the difference between the amount of taxes owed and the amount collected. d) none of the above answers are correct. 2. Which of the following pairs would BOTH shift the AD curve to the left? a) Increase in exchange rate of dollar; increase in foreign income. b) Decrease in exchange rate of dollar; increase in foreign income. c) Increase in exchange rate of dollar; decrease in foreign income. d) Decrease in exchange rate of dollar; decrease in foreign income. 3. At potential GDP, a) there is no unemployment but there is not necessarily full employment. b) there is no unemployment and there is full employment. c) real wages equal nominal wages. d) unemployment is at its natural rate. e) none of the above are correct. 4. In the above figure, the short-run aggregate supply curve is SAS and the aggregate demand curve is AD. A recessionary gap exists a) if the long-run aggregate supply curve is LAS 1 . b) if the long-run aggregate supply curve is LAS 2 . c) if the long-run aggregate supply curve is LAS 3 . d) all of the above answers are correct. 5. In the macroeconomic long run, a) real GDP = potential GDP. b) the economy is at full employment. c) regardless of the price level, the economy is producing at potential GDP. d) all of the above are correct. e) only a) and b) are correct. 6. In the 1970s cars were required to be equipped with anti-pollution devices that helped reduce air pollution. If a 1977 car has a $200 higher price than a 1976 car to reflect the cost of added anti-pollution equipment, the government would correctly count the benefits of the cleaner air in real GDP if it a) treats the $200 price increase as inflation. b)
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201Mid02Fall2 - Econ 201 Prof. Gordon Fall 2002...

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