Econ102_Exam2_V4_Winter08_

Econ102_Exam2_V4_Winter08_ - Winter Semester 2008 Economics...

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Winter Semester 2008 Form 4 Economics 102 – Principles of Economics II Department of Economics – University of Michigan Examination No. 2 – Section 100 Circle the correct answer for each of the following questions . 1. Your form number is A) 1 B) 2 C) 3 D) 4 2. If the Fed buys government bonds, banks will have A) excess reserves, leading to an increase in the money supply. B) excess reserves, leading to a decline in the money supply. C) insufficient reserves, leading to an increase in the money supply. D) insufficient reserves, leading to a decline in the money supply. 3. The duration of unemployment A) rises in a boom and falls in a recession. B) rises in a recession and falls in a boom. C) will rise if unemployment compensation programs were eliminated. D) is always unrelated to the skills of the unemployed. 4. Which of the following statements is true ? A) A recession occurs when the expenditure line shifts down the 45-degree line. B) A recession occurs when the expenditure line crosses the 45-degree line at a level of income less than potential GDP. C) A recession occurs whenever income and expenditures are not equal. D) A recession occurs whenever potential GDP is less than real GDP at the point of spending balance. 5. Suppose there is an increase in the level of exogenous investment in the economy. This will cause A) a downward shift in the aggregate expenditure line and a higher level of spending balance. B) an upward shift in the aggregate expenditure line and a higher level of spending balance. C) a downward shift in the aggregate expenditure line and a lower level of spending balance. D) an upward shift in the aggregate expenditure line and a lower level of spending balance. 6. The model of the money market predicts that the equilibrium interest rate will A) rise if the money supply increases. B) rise if people have lower real incomes. C) fall if the money supply declines. D) fall if people have lower real incomes. 7. Constant returns to scale means that A) reducing all inputs in production by half reduces output produced by half. B) increasing the level of an input, ceteris paribus, increases output produced at an increasing rate. C) doubling one input in production doubles output produced. D) increasing the level of an input, ceteris paribus, increases output produced at a decreasing rate. (OVER)
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Winter Semester 2008 Form 4 Figure 1 8. In Figure 1, the displayed shift in labor supply could be caused by A) an increase in the firm’s capital stock. B)
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This note was uploaded on 04/04/2008 for the course ECON 102 taught by Professor Rossana during the Winter '08 term at University of Michigan.

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Econ102_Exam2_V4_Winter08_ - Winter Semester 2008 Economics...

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