ECON 100B - Spring 2006 - Wood - Midterm 2

# ECON 100B - Spring 2006 - Wood - Midterm 2 - Name(Last name...

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Spring 2006 (IS-LM Model) 1 Name: ____________________ (Last name, first name) SID: ____________________ Lecture (1 or 2): ____________________ UGBA 101B Macroeconomic Analysis for Business Decisions Dr. Steven Wood Spring 2006 Exam #2 Please sign the following oath: The answers on this test are entirely my own work. I neither gave nor received any aid while taking this test. I will not discuss the questions on this test until after 5:00 p.m. on March 23, 2006. ______________________ Signature Any test turned in without a signature indicating that you have taken this oath will be assigned a grade of zero. Graph Instructions When drawing diagrams, the following rules apply: a. Completely , clearly and accurately label all axis, lines, curves, and equilibrium points. b. The original diagram and equilibrium points MUST be drawn in black. c. The first shift of any line(s) and the new equilibrium points MUST be drawn in red. d. Any subsequent shifts in curves and new equilibrium points MUST be drawn in another color, preferably blue and then green. Do NOT open this test until instructed to do so.

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Spring 2006 (IS-LM Model) 2 A. Multiple Choice Questions . Circle the letter corresponding to the best answer. (3 points each; total of 30 points.) 1. Suppose that a fall in tax rates always raises potential output. If unemployment starts at the NAIRU and tax rates are reduced, then a central bank stabilizing the economy at potential output will: a. Raise interest rates. b. Reduce interest rates. c. Leave interest rates unchanged. d. Leave the money supply unchanged. e. Cannot be determined. 2. Suppose that unemployment is below the NAIRU. Then we know that: a. The actual budget balance is below the structural budget balance.
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ECON 100B - Spring 2006 - Wood - Midterm 2 - Name(Last name...

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