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Midterm 2 _ECN 1B Winter 2011__KEY_

Midterm 2 _ECN 1B Winter 2011__KEY_ - University of...

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Page 1 of 11 University of California, Davis Department of Economics ECN 1B Midterm Examination 2 Winter 2011 B. Modjtahedi ______________________________________________________________________________ Question 1 Concerning the effect of the Economic Stimulus Act 0f 2008, the recent U.S. data on real personal consumption expenditure and real disposable income is consistent with which of the following statements? A. They support the Keynesian consumption theory by showing a strong positive relationship between income and consumption. B. They support both the life-cycle and the permanent-income theories of consumption by showing that a permanent increase in income has a strong effect on consumption. C. They reject both the life-cycle and the permanent-income theories of consumption by showing that a transitory increase in income has a strong effect on consumption. D. They reject the life-cycle theory of consumption by showing that household wealth has no effect on consumption. E. None of the above. Question 2 Which of the following statements is accurate about the empirical effects of the Economic Stimulus Act 0f 2008 and the Economic Recovery and Reinvestment Act of 2009?
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Page 2 of 11 Question 3 Which of the following conclusions do the U.S. data on M2 money supply and nominal GDP support?
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