381 Midterm 2 Test

# 381 Midterm 2 Test - Economics 381 Fall 2009 Section 5 Midterm 2 Instructor Matt Butler Questions 1 through 6 are multiple choice questions You may

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Economics 381 Fall 2009 Section 5 Midterm 2 Instructor Matt Butler Questions 1 through 6 are multiple choice questions. You may mark more than one answer though the total correct points will be divided by the number of answers circled . Each multiple choice question is worth 5 points. So if you circled three answers and one happened to be correct you would receive 5/3 points. There are three short answer questions. The exam is worth a total of 100 points. You must SHOW YOUR WORK or PROVIDE EXPLANATIONS for each short answer question. Good luck and remember that this test will be part of your curved grade. If you struggle with one or more problems it is likely that other students in the class will also struggle. Page 1 of 9

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Multiple Choice Questions (30 Total Points) 1. In the closed IS-LM model, if the MPC equals 0.75, then a \$1 billion increase in government spending increases planned expenditures by _____ and increases the equilibrium level of income for a given r (i.e. holding r constant) by _____: a. \$1 billion, more than \$1 billion b. \$0.75 billion, more than \$0.75 billion c. \$0.75 billion, \$0.75 billion d. \$1 billion, \$1 billion 2. If the marginal propensity to consume is 0.6, and government expenditures and taxes
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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 Midterm 2 Test - Economics 381 Fall 2009 Section 5 Midterm 2 Instructor Matt Butler Questions 1 through 6 are multiple choice questions You may

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