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c11fspring99sol - Intermediate Macroeconomics C11-1...

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Intermediate Macroeconomics C11-1 Professor Gordon Final Examination, Spring 1999 YOUR NAME: ___________________________________________________________ SOCIAL SECURITY NUMBER: ____________________________________________ INSTRUCTIONS: 1. This is a closed book exam. You may use a calculator 2. Write your answers to Part A in the blanks on this page. Do not write your answers on the multiple choice questions. 3. Write your answers to Part B and Part C in the spaces provided. TIME ALLOCATION POINT ALLOCATION PART A 40 40 PART B 60 60 PART C 30 30 PART A – In the spaces below write your answers to the multiple choice questions (40 minutes, 1 point each.) 1. _______ 11. _______ 21. _______ 31. _______ 2. _______ 12. _______ 22. _______ 32. _______ 3. _______ 13. _______ 23. _______ 33. _______ 4. _______ 14. _______ 24. _______ 34. _______ 5. _______ 15. _______ 25. _______ 35. _______ 6. _______ 16. _______ 26. _______ 36. _______ 7. _______ 17. _______ 27. _______ 37. _______ 8. _______ 18. _______ 28. _______ 38. _______ 9. _______ 19. _______ 29. _______ 39. _______ 10. ______ 20. _______ 30. _______ 40. _______
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PART B QUESTION 1 (21 points; 21 minutes) This question studies the qualitative effects of different government policies under three different setups. Consider the three following cases related to the asssumptions on the goods and money markets, which imply distinct aggregate demand curves. CASE 1 : (7 points) Neither investment nor consumption respond to the interest rate. There is a Pigou effect. The money demand is standard. CASE 2 : (7 points) Investment and consumption respond negatively to the interest rate. Money demand responds negatively to the interest rate but it doesn’t respond to output. There is no Pigou effect. CASE 3 : (7 points) Investment and consumption respond negatively to the interest rate. Money demand is infinetily elastic (horizontal) to changes in the interest rate. There is no
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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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c11fspring99sol - Intermediate Macroeconomics C11-1...

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