311M2Fall04 - Intermediate Macroeconomics 311(Professor...

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Intermediate Macroeconomics 311 (Professor Gordon) Second Mid-Term Examination Fall, 2004 YOUR NAME: _______________________________ INSTRUCTIONS: 1. The exam lasts for 1 hour. 2. The exam is worth 60 points in total: - 30 points for the two analytical questions - 30 points for the multiple choice. 3. Write your answers to Part A (the multiple choice section) in the blanks on page 1. 4. Place all of your answers for part B in the spaces provided 5. GOOD LUCK! PART A Answer multiple choice questions in the space provided below. USE CAPITAL LETTERS. 1. _ _ __ 6. _ _ __ 11. _ _ __ 16. _ _ __ 21. _ _ __ 26. _ _ __ 2. _ _ __ 7. _ _ __ 12. _ _ __ 17. _ _ __ 22. _ _ __ 27. _ _ __ 3. _ _ __ 8. _ _ __ 13. _ _ __ 18. _ _ __ 23. _ _ __ 28. _ _ __ 4. _ _ __ 9. _ _ __ 14. _ _ __ 19. _ _ __ 24. _ _ __ 29. _ _ __ 5. _ _ __ 10. _ _ __ 15. _ _ __ 20. _ _ __ 25. _ _ __ 30. _ _ __
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PART A) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question (1 point each) 1) The “Big Mac Hamburger Standard” illustrates that relatively poor countries A) have their standard of living understaed by PPP exchange rates B) have their standard of living understated by market exchange rates C) have their standard of living overstated by market exchange rates D) have their standard of living overstated by PPP exchange rates 2) Employing the above figure with equilibrium initially at E0, assume the nominal money supply eased. If prices are flexible, in the short run ________ and in the long run ________. A) prices and output rise as in E2; output remains at 3000 B) prices and output rise, E0 to E2; output returns to E3 C) prices and output remain at E0; output changes to 2500 D) none of the above 3) Suppose the government increases its expenditures by $100 billion and simultaneously reduces the money supply by $100 billion. We definitely know that A) equilibrium GDP will rise. B) the interest rate will rise. C) the interest rate will fall. D) equilibrium GDP will fall.
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4) When (if at all) can the crowding-out effect be prevented? A) when the Fed decreases the money supply to accommodate the expansionary fiscal policy B) when the Fed allows the real money supply to increase sufficiently to keep the interest rate from rising C) when the real money supply is held constant D) when the real balance effect is working 5) If the Federal Reserve intervenes in the foreign-exchange markets by selling foreign currencies A) the U.S. money supply falls and foreign currencies appreciate. B) the U.S. money supply falls and foreign currencies depreciate. C) the U.S. money supply rises and foreign currencies depreciate. D) the U.S. money supply rises and foreign currencies appreciate. 6)
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This note was uploaded on 09/04/2010 for the course ECON 311 taught by Professor Gordon during the Spring '08 term at Northwestern.

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311M2Fall04 - Intermediate Macroeconomics 311(Professor...

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