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econ 232-spring 2011-midterm

econ 232-spring 2011-midterm - ECON 232 SPRING 2011 MIDTERM...

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ECON 232 SPRING 2011 MIDTERM Name: Student Number: MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following calculations will yield the correct measure of real GDP? 1) A) multiply nominal GDP by the GDP deflator. B) divide nominal GDP by the consumer price index. C) divide the GDP deflator by the consumer price index. D) divide nominal GDP by the GDP deflator. E) none of the above 2) Suppose nominal GDP in 2009 does not change (compared its previous level in 2008). Given this information, we know with certainty that: 2) 3) Let the consumption function be represented by the following equation: C = c 0 + c 1 Y D. For this equation, we assume that c 1 is 3) 4) Which of the following represents total saving for an economy? 4) 5) Which of the following events will cause a reduction in equilibrium output? 5) A) an increase in taxes. B) an increase in the marginal propensity to save. C) a reduction in the investments. D) all of the above. E) none of the above. 6) If C = 2000 + .9Y D , what increase in government spending must occur for equilibrium output to increase by 1000? 6) 1
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7) When a closed economy is in equilibrium, we know with certainty that: 7) 8) Based on our understanding of the model presented in Chapter 3, a reduction in investment will cause: (in the short run) 8)
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