Midterm_2_-_Version_A_-_solutions

# Midterm_2_-_Version_A_-_solutions - Midterm 2 Principles of...

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Midterm 2 – Principles of Macroeconomics (Econ 3) – Spring 2009 – UC San Diego Wednesday, 2:00-2:50pm, May-20, 2009 Version A DO NOT OPEN YOUR EXAM UNTIL INSTRUCTED TO DO SO! SOLUTIONS Last name: _____________________ First name: _____________________ Student ID: _____________________ INSTRUCTIONS: 1. Write your name and Student ID clearly on this sheet. 2. Make sure you have all 8 pages. There are 10 multiple-choice questions and 3+1 short- answer questions. 3. Answer the multiple-choice questions in the space provided below. 4. Answer the short-answer questions in the space provided below the questions. 5. You may use a calculator. 6. Use a pen. (If you use pencil you will not be able to request a re-grade.) 7. Show your work so that we can give you partial credit. 8. There are a total of 100 points. Part I (multiple-choice) counts for 40 points, Part II (short- answer) counts for 60 points. Academic dishonesty : Cheating will result in both academic and administrative consequences. MULTIPLE CHOICE ANSWERS (4 points each) 1. 6. 2. 7. 3. 8. 4. 9. 5. 10. 1 Part I (MC) Part II (SA) Question 1 Question 2 Question 3 Extra credit Total Score

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Part I – Multiple Choice (40 points) 1. Pat pays \$10,000 for a newly issued two-year government bond with a \$10,000 face value and a 6 percent coupon rate. One year later, after receiving the first coupon payment, Pat sells the bond. If the current one-year interest rate on government bonds is 5 percent, then the price Pat receives is: A. \$10,000. B. \$500. C. greater than \$10,000. D. less than \$10,000. 2. If real GDP equals 5,000, nominal GDP equals 10,000, and the price level equals 2, then what is velocity if the money stock equals 2,000? A. 2 B. 2.5 C. 10 D. 5 3. Recessions begin at _____ and end at _____. A. the highest unemployment rate; the lowest unemployment rate B. the lowest unemployment rate; the highest unemployment rate C. a peak; a trough D. the highest inflation rate; the lowest inflation rate. 4. If the natural rate of unemployment equals 5% and the actual rate of unemployment equals 6%, then cyclical unemployment equals: A. 20% B. 0% C. 1% D. 6% 5. In a country that operates according to Okun's law, real GDP equals \$7,520 billion, potential
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Midterm_2_-_Version_A_-_solutions - Midterm 2 Principles of...

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