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Unformatted text preview: Economics 208 Marek Kapicka Macroeconomics Spring 2010 Final Answers You have two hours. This is a closed book/closed notes exam. No cell phones or calculators are allowed. Please write all your answers on the exam paper. There is 400 points in total. Good luck! Your name: (5 points) 1 Multiple Choice (6 pts each). There is only one correct answer for each question. 1. The money multiplier A) depends negatively on the reserve-deposit ratio and negatively on the currency-deposit ratio. B) depends positively on the reserve-deposit ratio and negatively on the currency- deposit ratio. C) depends negatively on the reserve-deposit ratio and positively on the currency- deposit ratio. D) depends positively on the reserve-deposit ratio and positively on the currency- deposit ratio. 2. If government spending is held constant and Ricardian equivalence holds, A) an increase in government savings is always matched by an increase in the government budget deficit. B) an increase in government savings is always matched by an equal increase in private savings. C) an increase in the government budget deficit is always matched by a reduc- tion in private savings. D) an increase in government savings is always matched by an equal reduction in private savings. 1 3. Fiscal coordination in a monetary union A) is always desirable. B) is desirable only for countries with myopic governments. C) is desirable only if the central bank lacks commitment. D) is never desirable. 4. During 2008, the monetary base in the U.S. economy A) sharply increased . B) sharply decreased. C) remained stable. D) first increased, and then decreased. 5. If the interest rate exceeds the population growth rate, A) fully funded social security system is more efficient than PAYG social security system. B) PAYG social security system is more efficient than fully funded social secu- rity system. C) both systems are equally efficient. D) It cannot be determined which system is more efficient. 6. Distorting taxes can invalidate Ricardian equivalence because A) they confuse consumers about the need for government to repay its debt. B) alternative ways of collecting the same tax revenue produce dif- ferent amounts of lost welfare. C) they are more popular, politically, than lump-sum taxes. D) they are inferior to lump-sum taxes. 7. An increase in government expenditures corresponding to 2% of GDP should, according to the model, increase GDP by A) more than 2%. B) between 0% and 2%. C) 0%. D) 2%. 8. Relative to France, the average annual hours worked in the U.S. have been A) higher in both 1970’s and 2000’s. B) lower in 1970’s and higher in 2000’s....
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This note was uploaded on 12/26/2011 for the course ECON 208 taught by Professor Staff during the Fall '08 term at UCSB.
- Fall '08