Problem Set _5 - Name(Last name first name SID GSI UGBA...

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Name: _________________________ (Last name, first name) SID: _________________________ GSI: _________________________ UGBA 101B Macroeconomic Analysis for Business Decisions Professor Steven Wood Summer 2010 Problem Set #5 Due: August 10, 2010 (at the beginning of class) 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 #5 1/11
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A. Multiple Choice Questions (30 points) . Circle the letter corresponding to the best answer. (3 points each.) 1. A decrease in the money supply causes the real interest rate to _____ and the price level to _____ in general equilibrium. a. Increase, increase. b. Increase; decrease. c. Decrease; decrease. d. Remain unchanged; decrease. 2. Which of the following changes would shift the SRAS curve up? 3. When the money supply declines by 10%, economic output _____ and the price level _____ in the long run. 4. One difficulty faced by policymakers who wish to use the unemployment rate as a guide to whether the economy is weak or strong is that:
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