ECON 325 - Sample Questions - MT2 - Fall 2009

ECON 325 - Sample Questions - MT2 - Fall 2009 - ECON 325...

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ECON 325 – Intermediate Macroeconomic Analysis Sample Questions – Midterm 2 Fall 2009 Prof. Boragan Aruoba Note that most of these questions are from ECON 305 which did not require any math. Multiple-Choice Questions 1. Consider an increase in the real interest rate in the context of the two-period model we studied and think about what happens to consumption today and tomorrow for a lender and a borrower. Choose the correct outcome: Lender Borrower Consumption Today Consumption Tomorrow Consumption Today Consumption Tomorrow (a) Increases Increases Increases Increases (b) Increases Ambiguous Ambiguous Increases (c) Ambiguous Increases Decreases Ambiguous (d) Ambiguous Ambiguous Increases Decreases (e) Decreases Ambiguous Decreases Decreases 2. An increase in the present value of taxes for the consumer implies (a) An increase in consumption and an increase in current labor supply. (b) No change in consumption and a decrease in current labor supply. (c) A decrease in consumption and an increase in current labor supply. (d) An increase in consumption and no change in current labor supply. (e) A decrease in consumption and a decrease in current labor supply.
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2 Short-Essay Questions 1. Concepts Briefly define the following concepts: a) Permanent Income Hypothesis This is the idea that people change their consumption behavior only to the changes to
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This note was uploaded on 03/08/2011 for the course ECON 602 taught by Professor Chugh during the Spring '11 term at Johns Hopkins.

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ECON 325 - Sample Questions - MT2 - Fall 2009 - ECON 325...

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