381 Final Spring 2008 Answers

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: a. real and nominal interest rate b. inputs of production and production function c. government budget surplus or deficit d. rate of economic and accounting profit 3. A competitive, profit-maximizing firm hires labor until the: a. marginal product of labor equals the nominal wage b. price of output multiplied by the marginal product of labor equals the nominal wage c. real wage equals the real rental price of capital d. wage equals the rental price of capital 4. According to the classical model developed in Chapter 3, when taxes decrease without a change in government spending: a. consumption and investment both increase. b. consumption and investment both decrease. c. consumption increases and investment decreases. d. consumption decreases and investment increases. 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: a. M. b. M minus percentage change in Y. c. M minus percentage change in Y plus percentage change in velocity. d. M minus percentage change in Y minus percentage change in velocity. 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: a. both the nominal interest rate and the current price level will decrease. b. the nominal interest rate will increase and the current price level will decrease. c. the nominal interest rate will decrease and the current price level will increase. d. both the nominal interest rate and the current price level will increase.
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Page 2 of 7 8. In a small open economy with perfect capital mobility in the classical model (Chapter 5), if the government adopts a policy that lowers imports, then that policy: a. raises the real exchange rate and increases net exports. b. raises the real exchange rate and does not change net exports.
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This note was uploaded on 04/07/2011 for the course ECON 381 taught by Professor Staff during the Winter '08 term at BYU.

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

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