Prelim 2 Makeup revised[1] - Name: Section Number or TA...

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Name: Second Prelim ECON 1120 – Professor Steven Kyle Section Number or TA Name: November 12, 2009 PART I : Multiple Choice, 10 points (each question is worth ½ point). 1. In the short run which of these causes an increase in output and an ambiguous impact  on overall prices? A. an increase in oil prices and a decrease in taxes B. technological improvement and reduction in the required reserve ratio  C. a wage increase and the Fed selling bonds D. increase in the discount rate and an increase in taxes Answer: B 2. Which of the following supports empirical evidence that wages are sticky? A. minimum wage laws B. contracts between employers and employees C. efficiency wage theory D. imperfect information of the market clearing wage on the part of the firm  E. all of the above Answer: E 3. People with higher income will generally have a ______ average propensity to consume,  even if they have the same marginal propensity to consume as lower income individuals. A. higher B. lower C. the same Answer: B 4. Which of the following if TRUE of a change in dividend payments?
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Name: Second Prelim ECON 1120 – Professor Steven Kyle Section Number or TA Name: November 12, 2009 A   There is no substitution effect because a change in dividend payments does not  change the trade-off between work and leisure B    There is no income effect because a change in dividend payments does not  change the trade-off between work and leisure C   There is no substitution effect because a change in dividend payments does not  change a household’s permanent income D   There is no income effect because a change in dividend payments does not  change a household’s permanent income Answer: A 5. The policy mix that would cause the interest rate to increase and investment to  decrease, but have an indeterminate effect on aggregate output, is a mix of A. Expansionary fiscal policy and expansionary monetary policy B. Contractionary fiscal policy and expansionary monetary policy C. Expansionary fiscal policy and contractionary monetary policy D. Contractionary fiscal policy and contractionary monetary policy Answer: C 6. Which of the statements about Social Security is false? A. Social Security payments are funded by taxes on income. B. Social Security payments are a relatively lnsignificant portion of retirement  income C. Social Security payments have never gone down when prices increase D. Only some of Social Security payments go to retired people E. None of the above Answer: B 7. At low levels of output, the economy can expand with little or no increase in the overall 
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Name: Second Prelim ECON 1120 – Professor Steven Kyle Section Number or TA Name: November 12, 2009
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Prelim 2 Makeup revised[1] - Name: Section Number or TA...

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