Econ_252_Final_-_PINK_-_Print

Econ_252_Final_PIN - LF LF LF LF 00 00 D D D D SY 1 1$ S D1 1 Di 1S S i i 1SY 11P1 $ S $ i 1 S D 1 S AD D $ S S S S ii0 0 ii0 0 D D D D ii ii P00 P

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P 0 Y P AS Y 0 AD P 0 Y P AS Y 0 P 1 AS’ P 1 AD’ AD Y 1 Y 1 P 0 Y P AS Y 0 AD P 0 Y P AS Y 0 AD AS’ P 1 P 1 AD’ Y 1 Y 1 LF D S i 0 i LF D S i 0 i S’ i 1 i 1 D’ S’ LF D S i 0 i LF D S i 0 i i 1 i 1 D’ Σ Σ 0 $ S D Σ Σ 0 $ S D Σ 1 Σ 1 D’ D’ S’ S’ Σ Σ 0 $ S D Σ Σ 0 $ S D Σ 1 Σ 1 ECON 252 : Principles of Macroeconomics Final Exam Purdue University, Spring 2011 PINK VERSION You have 2 hours to complete this exam. 1. The short run impact of an increase in taxes is best represented in our AS-AD model as: a) c) b) d) 2. In the short run, following an increase in taxes, interest rates will _____ and investment will _____. a) decrease; decrease c) increase; decrease e) None of the above are correct. b) decrease; increase d) increase; increase 3. In the short run, following an increase in taxes, household consumption will _____ and net exports will _____. a) decrease; decrease c) increase; decrease e) None of the above are correct. b) decrease; increase d) increase; increase 4. An unexpected rise in the rate of inflation: a) generates “shoe leather costs” and the resulting inefficiencies associated with such costs. b) redistributes wealth from lenders to borrowers. c) reduces real wealth of all members of society. d) All of the above are correct. 5. Which of the transactions below represents a capital outflow from the United States. a) Toyota, a Japanese company, builds a new production plant in Indiana. b) Goldman Sachs, a U.S. Investment Bank, buys bonds sold by the British Government. c) The Chinese government increases its holdings of U.S. dollars. d) All of the above are capital outflows. Econ 252 Final - PINK Page 1 of 7 Spring 2011 – Purdue University
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Large current and projected future government budget deficits in the United States are raising concerns both here and abroad about relative risk of U.S. bonds versus Foreign bonds. Ceteris paribus, if U.S. bonds are considered to be relatively more risky to purchase and hold, we will see a(n) _______ in real interest rates in the United States and a real ________ of the dollar in world currency markets. a) decrease; depreciation c) increase; depreciation e) None of the above are correct. b) decrease; appreciation d) increase; appreciation 7. As we move along the Aggregate Demand curve following a fall in the price level, the level of investment will ______ and Net Exports will ______. a) decrease; decrease c) increase; decrease e) None of the above are correct. b) decrease; increase d) increase; increase 8. Foreign central banks have recently moved to raise interest rates in their countries. In the open economy model developed in the textbook, the impact of an increase in the level of foreign interest rates on the U.S. loanable funds (LF) market is best represented as: a) c) b) d) 9. Which of the graphs below correctly depicts the impact of an increase in the level of foreign interest rates in the market for the dollar? Here Σ = EP/P*, where E = the foreign currency price dollar, P = price level in the United States, and P* = the foreign price level. I.e.,
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This note was uploaded on 08/02/2011 for the course ECON 252 taught by Professor Robertholand during the Spring '08 term at Purdue University-West Lafayette.

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Econ_252_Final_PIN - LF LF LF LF 00 00 D D D D SY 1 1$ S D1 1 Di 1S S i i 1SY 11P1 $ S $ i 1 S D 1 S AD D $ S S S S ii0 0 ii0 0 D D D D ii ii P00 P

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