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# 381 Final Spring 2008 Answers - ECON 381/MANEC 453/ACC 453...

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Page 1 of 7 E CON 381/M AN E C 453/A CC 453 S PRING 2008 I NSTRUCTOR : M ATTHEW B UTLER F INAL E XAM A NSWER K EY Multiple Choice Questions (100 Points): Questions 1 through 20 are multiple choice questions. Each question is worth 5 points. 1. If nominal GDP increased by 5 percent and the GDP deflator increased by 3 percent, then real GDP _____ by _____ percent. a. increased, 2 b. decreased, 2 c. increased, 8 d. decreased, 8 2. In the classical model, in the long run the level of national income in an economy is determined by its: 3. A competitive, profit-maximizing firm hires labor until the: 4. According to the classical model developed in Chapter 3, when taxes decrease without a change in government spending: 5. If an earthquake destroys some of the capital stock, the classical theory of distribution (who gets Y) predicts: a. the real wage will rise and the real rental price of capital will fall. b. both the real wage and the real rental price of capital will fall. c. both the real wage and the real rental price of capital will rise. d. the real wage will fall and the real rental price of capital will rise. 6. With no simplifying assumptions and using the quantity equation, the inflation rate is approximately equal to the percentage change in: 7. Given ) , ( Y i L P M d , if the Fed announces that it will raise the money supply in the future but does not change money supply today:

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381 Final Spring 2008 Answers - ECON 381/MANEC 453/ACC 453...

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