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100b08sfin - Economics 100B UCSC Professor K Kletzer Fall...

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Economics 100B Professor K. Kletzer UCSC Fall 2008 Sample Final Examination Instructions: You may find graphs or equations useful in your explanations, but do not just draw shifting curves or write down equations. Your prose explanation will be graded. The total number of points is 200. Part A (20 points each) Choose any 4 of the following statements. Explain why the claims in these statements are true, false or ambiguous. A1) A permanent decrease in the growth rate of the money supply reduces the nominal and real interest rates in the short run but not in the medium run. A2) An increase in the growth rate of the money supply causes the exchange rate to rise and imports to fall in the short run. A3) A tax cut leads to a real depreciation and an increase in net exports in the short and medium runs. A4) An expected future monetary expansion increases current inflation, stock prices and output. A5) A fiscal expansion has a smaller effect on output in the short run under a floating exchange rate than under a fixed exchange rate.
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