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Midterm 2 Version 3

Midterm 2 Version 3 - ECON 102 Introductory Macroeconomic...

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ECON 102: Introductory Macroeconomic Analysis SECOND MIDTERM EXAM, Version 3 November 10, 2010 This exam contains 30 multiple choice questions. Identify the letter of the choice that best completes the statement or answers the question. Each question is worth an equal number of points. Be sure to answer questions on the bubble answer sheet provided. Any questions answered on the test question sheets will not be counted. Calculators are allowed. _______________________________________________ Please write your name on the test sheet and on the bubble sheet. VERY IMPORTANT : Write “3” in the space provided on the bubble sheet to indicate the version of your exam. Both the test sheet and the bubble sheet must be turned in at the end of the exam. _______________________________________________
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1.
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Assume the economy is in long-run equilibrium, and then there is a negative supply shock. As a result, in the short run, a. actual GDP will go below potential GDP, and unemployment will go below the natural rate. b. actual GDP will go above potential GDP, and unemployment will go below the natural rate. c. the price level will go up, and unemployment will go below the natural rate d. the price level will go up, and unemployment will go above the natural rate Figure 12-1 2.
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Refer to Figure 12-1. Assume the economy is at point A. Then, foreign GDP increases, while domestic GDP, and all other variables, remain the same. As a result, the economy moves in the short run to point ____, and in the long run to point ____. a.
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D; A b.
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D; C c.
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B; A d.
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B; C 3.
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In exchange for the risks involved with owning stock, stockholders receive all of the following benefits except: a. guaranteed dividend payments b. ownership in the company c. residual claim on firm assets in the event of bankruptcy d. higher returns, on average, over the long run 4.
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All other things being equal, an increase in net capital outflow (NCO) from the United States will a.
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decrease the balance on the U.S. financial account. b.
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increase the balance on the U.S. financial account. c.
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decrease the balance on the U.S. current account. d.
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leave the U.S. current and financial accounts unchanged. 5.
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Which of the following correctly describes the automatic mechanism through which the economy adjusts to long- run equilibrium? a.
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the leftward shift of the short-run aggregate supply curve that occurs after a recession b.
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the rightward shift of the short-run aggregate supply curve that occurs after a recession c.
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the leftward shift of the aggregate demand curve that occurs after a recession d.
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the rightward shift of the aggregate demand curve that occurs after a recession 6. Suppose the loanable funds market is currently in equilibrium. Then, there is a decrease in private saving (S). This will result in a.
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