Midsol - Economics 243-01 Solution to midterm examination...

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Economics 243-01 Solution to midterm examination Fall 2000 Part A: Multiple-choice question. 1. A; 2. D; 3. E; 4. B; 5. A; 6. B; 7. B; 8. B; 9. D; 10. D; 11. D; 12. A; 13. E; 14. A/C; 15. E; 16. C; 17. C; 18. B; 19. C; 20. B 21. B; 22. C; 23. E; 24. A; 25. D. Part B: Complete the following sentences. 1. increase/purchase; an open market operation 2. bank reserves; currency in circulation 3. net creditor; net debtor 4. credit; current account/investment income receipts from abroad/category I 5. short position; long position 6. lower; higher 7. 0.698x(119/117) = $0.71/DM 8. Yen/Pound = 2.00/0.0075 = 266.67 or pound 0.00375/Yen 9. foreign exchange market 10. decrease/reduction 11. goods; asset/bond 12. Eurobank 13. the sum of categories I, II, and III is zero Part C: Short answer questions. 1. P is positively related to money demand because an increase in the price level requires more money to carry out a given (same) transaction as before. Y is positively related to money demand for two reasons.
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Midsol - Economics 243-01 Solution to midterm examination...

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