311FinFall04 - Intermediate Macroeconomics 311(Professor...

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Intermediate Macroeconomics 311 (Professor Gordon) Final Examination Fall, 2004 YOUR NAME: _______________________________ INSTRUCTIONS: 1. This is a closed book exam. Calculator memories must be empty. 2. The exam lasts for 2 hours. 3. The exam is worth 120 points in total: - 30 points for the multiple choice - 60 points for the analytical problems. - 30 points for the essay question 4. Write your answers to Part A (the multiple choice section) in the blanks on page 1. 5. Place all of your answers for part B in the spaces provided 6. Write your answers to Part C in a separate bluebook 7. GOOD LUCK! PART A Answer multiple choice questions in the space provided below. USE CAPITAL LETTERS. 1. _C _ __ 6. _A _ __ 11. _ _C __ 16. _ _D __ 21. _ _C __ 26. _C _ __ 2. _ _B __ 7. _ _B __ 12. _ _D __ 17. _ _B __ 22. _ _ _D_ 27. _ _B __ 3. _C _ __ 8. _ _ _A_ 13. _ _D __ 18. _ _E __ 23. _ _ _D_ 28. _ _B __ 4. _B _ __ 9. _ _B __ 14. _ _D __ 19. _ _A __ 24. _ _A __ 29. _ _A __ 5. _C _ __ 10. _ _D __ 15. _ _D __ 20. _ _D __ 25. _ _D __ 30. _ _B __
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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A nation running a current account deficit must either be ________ its indebtedness to foreigners in the private sector or ________ its indebtedness to foreign governments. A) decreasing, decreasing B) increasing, increasing C) increasing, decreasing D) decreasing, increasing 2) Suppose that U.S. and British inflation rates are equal, and $2 exchanges for 1 British pound. Then if U.S. inflation slows down relative to British inflation, the PPP theory predicts ________ of the dollar, so that the pound will cost ________ than $2. A) an appreciation, more B) a depreciation, less C) a depreciation, more D) an appreciation, less 3) Switching the U.S. policy mix to a tighter fiscal and easier monetary policy ________ the U.S. interest rate, leading to ________ of the dollar, which puts ________ long-run pressure on the U.S. foreign trade surplus. A) lowers, appreciation, downward B) lowers, depreciation, upward C) raises, depreciation, upward D) raises, depreciation, downward E) raises, appreciation, upward 4) Keynes held out the possibility of "monetary impotence" causing the aggregate demand curve to be ________ below the natural real GDP, which results in an economy with ________ self-correction. A) horizontal, instant B) vertical, instant C) vertical, no D) horizontal, no 5) Keynes discussed the possibility of a horizontal LM curve, which causes a ________, thus the possibility of ________.
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A) horizontal AD curve, monetary impotence B) vertical AD curve, monetary impotence C) horizontal AD curve, an escape from monetary impotence D) vertical AD curve, an escape from monetary impotence 6) Suppose we have an initial IS-LM equilibrium at a certain price level. A rise in the price level puts ________ pressure on the interest rate as the money market re-equilibrates, which in turn causes commodity market equilibrium to occur at an output level ________ the initial one. A) upward, below
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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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311FinFall04 - Intermediate Macroeconomics 311(Professor...

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