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# Midterm1sp - Econ 320 001 Midterm Exam#1 The exam has a...

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1 Econ 320 - 001 Midterm Exam #1, February 15, 2008 The exam has a total of 17 questions (150 points). You will have 50 minutes to complete the exam. Good Luck! Print your Name_______________________________ Sign the honor Pledge affirming that you have neither given nor received aid on this exam and have complied with all of the rules of this exam. Signature______________________________________ Turn this sheet and the scantron sheet in with your answers. I. Multiple Choice (50%) Instructions: For questions 1-15, mark the letter for the best answer choice for each question on the computer readable (scantron) answer sheet. Each question in this section is equally weighted. Read each question carefully Tips: For the Cobb – Douglas production function (Y=AK α L 1- α ), the MP K = α AK α -1 L 1- α and the MP L = (1- α )AK α L - α 1. (5 pts) If the real interest rate is 6 percent and inflation is 3 percent, then the opportunity cost of holding money is ______ percent. a. 2 b. 3 c. 6 d. 9 2. (5 pts) The inconvenience associated with reducing money holdings to avoid the inflation tax is called: a. menu costs. b. shoeleather costs. c. variable yardstick costs. d. Fixed costs. 3. (5 pts) If the real interest rate and real national income are constant, according to the quantity theory and the Fisher effect, a 1-percent increase in money growth will lead to rises in: a. inflation of 1 percent and the nominal interest rate of less than 1 percent b. inflation of 1 percent and the nominal interest rate of 1 percent c. inflation of 1 percent and the nominal interest rate of more than 1 percent d. both inflation and the nominal interest rate of less than 1 percent

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## This document was uploaded on 10/28/2011 for the course ECON 320 at UNC.

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Midterm1sp - Econ 320 001 Midterm Exam#1 The exam has a...

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