mt1-f2004 - Midterm #1 Econ 100B 125 points total; 62...

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Midterm #1 Fall 2004 Econ 100B Questions 125 points total; 62 minutes total. (2 points per minute) Question 1 (10 points; 6 minutes) Suppose that in some year, total output in an economy was $3,000 billion, income earned by labor and other factors of production was $3,300 billion, and total sales of final goods and services was $2,800 billion. (A) (5 points) Show how income equals output in this economy. (B) (5 points) Show how output equals expenditure in this economy. Question 2 (12 points; 6 minutes) Alan Blinder and Janet Yellen use two macro models to estimate the effect of various policies and events on the economy of the 1990s. The table below draws from two of their tables – the top panel is based on Table 3.1; it shows the effect of the Fed’s easy money policy in 1992-94; the bottom panel is based on Table 4.1; it shows the effect of the 1993 bond market rally. Effect on real GDP growth rate (deviation from baseline) Model 1993:4 1994:4 1995:4 1992-94 easy money policy WUMM 0.7 0.0 -0.3 FRB-US 0.7 0.6 0.2 1993 bond market rally WUMM 1.0 0.2 -0.5 FRB-US 0.6 0.7 0.0 Which event – the monetary policy or the bond market rally – appears to have benefitted the
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This note was uploaded on 02/04/2011 for the course ECON 100B taught by Professor Wood during the Fall '08 term at University of California, Berkeley.

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mt1-f2004 - Midterm #1 Econ 100B 125 points total; 62...

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