2010SPRING_midterm2 - ECO320L-Macroeconomic Theory Midterm...

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Unformatted text preview: ECO320L-Macroeconomic Theory Midterm 2 Total 100 points NAME: ............................................................. Some Remarks: 1. Books and notes should be closed. 2. You can use a calculator. Exchange of calculator is not allowed. 3. Do not forget to label axes when you draw a graph. 4. Show your work. Good Luck! Total Exam Grade: (........./100pts) Multiple Choice Questions (........./35pts) (5pts each) 1. The Ricardian equivalence theorem implies that a government debt policy must be handled correctly for the economy to prosper. b the amounts of government spending are neutral. c an increase in government spending has no effect on the economy, as long as there is an equal change in taxes. d the timing of taxes collected by the government is neutral. 2. When there are credit-market imperfections, an increase in government debt in the current period (holding government spending constant) may be advantageous because it a allows credit-constrained consumers to borrow more. b allows credit-constrained consumers to consume more in the current period. c discourages private saving. d all of the above. 3. An increase in the real interest a increases savings for both borrowers and lenders. b increases savings for borrowers, but has an uncertain effect on the savings of lenders....
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This note was uploaded on 02/04/2011 for the course ECON 320L taught by Professor Kuruscu during the Fall '08 term at University of Texas.

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2010SPRING_midterm2 - ECO320L-Macroeconomic Theory Midterm...

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