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Problem Set _2

# Problem Set _2 - Name(Last name first name SID UGBA 101B...

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Name: _________________________ (Last name, first name) SID: _________________________ UGBA 101B Macroeconomic Analysis for Business Decisions Professor Steven Wood Summer 2010 Problem Set #2 Due: July 16, 2010 (at the beginning of discussion section) Please sign the following oath: The answers on this problem set are entirely my own work. I neither copied from the work of others nor allowed others to copy from my work. _______________________________________ Signature Any problem set turned in without a signature will be assigned a grade of zero. Problem Set Instructions 1. When drawing diagrams, clearly and accurately label all axis, lines, curves, and equilibrium points. 2. Graphs and equations MAY be drawn by hand. 3. Explanations MUST be word-processed. Your explanations should be succinct and to the point. Problem Set #2 1/8

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A. Multiple Choice Questions (30 points) . Circle the letter corresponding to the best answer. (3 points each.) 1. Which of the following would be part of the nation’s capital and financial account? a. A night club show seen by an American in Mexico City. b. A dividend from a British equity owned by an American. c. A payment to the Philippine government for the use of military bases in their country. d. One hundred shared of British Petroleum stock purchased by an American. 2. A small open economy increases its investment demand. This causes the world real interest rate to _______ and the country’s current account balance to _______. 3. A large open economy reduces its investment demand. This causes the world real interest rate to _______ and the country’s current account balance to _______.
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