ECON304 - MidTerm02_KEY - F10

ECON304 - MidTerm02_KEY - F10 - Sonoma State University...

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Sonoma State University Department of Economics ECN 304 Florence Bouvet Fall 2010 Midterm 2 -Answer Key Name (Please Print): _ Scores: Part I: 150 Part II: 150 Total: 1100 Please Note: 1. Succinct responses are strongly encouraged. Any erroneous or too much irrelevant information will count against you. Therefore, you will not receive full credit if you provide a complete correct answer but also include erroneous or too much irrelevant information. No credit will be given to answers that do not address the question. 2. Show all your work. Make sure you show all equations used in each calculation. Answers without supporting calculations will receive very little credit. 3. For most questions, you are given a lot more space than you really need. When time is called, please stop work immediately.
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Multiple Choice Questions ( 50 points) I) Which list ranks assets from least to most liquid? a. currency, fine art, stocks b. currency, stocks, fine art c. fine art, currency, stocks d. fine art, stocks, currency 2) In the US, most spells of unemployment are a. short, but most unemployment observed at any given time is long term. b. short, and most unemployment observed at any given time is short term. c. long, and most unemployment observed at any given time is long term. d. long, but most unemployment observed at any given time is short term. 3) The demand for money is a. Negatively related to the price level b. Negatively related to the interest rate c. Negatively related to real GOP d. None of the above 4) a. r>. b. c. d. 5) a. b. c. d. Structural unemployment is unemployment caused by: Generous unemployment benefits Minimum-wage legislation The time it takes workers to search for and find a job Sectoral shifts The concept of monetary neutrality in the classical model means that an increase in the money supply will increase: Real GOP Real interest rate Nominal interest rate Both saving and investment by the same amount 6) During the transition to the steady state in the Solow model (assuming that the country starts with a level of capital per worker smaller that its steady state value) a. Output per worker falls b. Labor force participation rises c. The growth rate of capital rises d. All of the above. 7) Sectoral shifts in the economy a. create structural unemployment. b. immediately reduce unemployment. c. increase unemployment due to job search. d. on net leave unemployment unchanged. 2
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r>. 8) a. b. c. d. 9) a. b. c. d. If a country experience an outflow of labor, then Labor demand shifts to the right, and the real wage decreases The labor supply shifts to the left and the real wage will increase Labor demand shifts to the left and the real wage increases Labor supply shifts to the right and the real wage will decrease Since 1960 the data show a tendency of output per worker to converge In all countries in the world In countries with different saving rates In OECD countries None of the above 10)According to the Quantity theory of money, ifreal output is higher,
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ECON304 - MidTerm02_KEY - F10 - Sonoma State University...

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