real mid 2 answer keys

real mid 2 answer keys - Midterm 2 Fall 2010 Econ 1102-032...

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Midterm 2 Fall 2010 Econ 1102-032 Name: ___ Answer Keys _____________ Section #:_____________(1 extra credit)_ TA Name: (1 extra credit) NO programmable calculators, NO cell phones NO notes, NO collaboration with other students Time limit: 70 minutes For full credit, graphs must be completely labeled and math work shown. If necessary, round answers to 2 decimal places or leave them in fractional form. Be sure to justify your answers clearly and precisely for full credit, even if question does not explicitly ask for justification. Follow directions carefully. The value of the problems adds up to 110 points. There is a cap of 100 on your grade. Rambling or incoherent responses will be penalized even if correct. ‘Illustrate’ means you should draw a picture. Label your graphs. Take your time. Take it easy. Don’t over think the questions and have fun.
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1102-032 Fall 2010 Midterm 2 Page 2 of 8 QUESTIONS 1 (18 pts) Answer all of the following questions Must show equations and values used for full credit. No work=no points, even if the answer is correct. Consider the following Short Run AS-AD model and (Extended) AS-AD model. 1. (6 pts) Suppose that in 2010, there is a serious earthquake in California, which damages infrastructures all over the state of California. Determine changes in overall price level, output level, unemployment and nominal wages in the short run compared to the initial equilibrium. You are also asked to illustrate short run changes on the graph. Overall price: Goes up Output: Goes down Unemployment: Goes up Nominal Wages: Stays the same 2. (6 pts) Now based on your answer in question (1), without government intervention, determine the changes of overall price, output, unemployment and nominal wages in the long run compared to the initial equilibrium. You are also asked to illustrate long run changes on the graph. Overall price: Goes back to initial price (no change) Output: Goes back to initial price (no change) Unemployment: Goes back to initial price (no change) Nominal Wages: Stays the same (no change) 3. (6 pts) Determine the changes of SRAS curve . (1) Consumers’ wealth increases. No change (2) Everybody expects high inflation. Shift in (3) Nominal wages decrease. Shift out Quantity Prices AD SRAS LRAS SRAS 2 e SR e LR (1) (2)
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1102-032 Fall 2010 Midterm 2 Page 3 of 8 QUESTIONS 2 (10 pts) Answer all of the following questions Must show equations and values used for full credit. No work=no points, even if the answer is correct. We discussed the ‘Reading Assignment’ about ‘ Understanding Unemployment data ’ in the recitation. Here goes discussion question.
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This note was uploaded on 10/05/2011 for the course ECON 1102 taught by Professor Someguy during the Fall '07 term at Minnesota.

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real mid 2 answer keys - Midterm 2 Fall 2010 Econ 1102-032...

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