Midterm II - ECON 514 Macroeconomic Theory and Policy Fall...

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ECON 514 Macroeconomic Theory and Policy Fall 2011 MIDTERM II Tuesday, 13 December 2011 17:40-19:40 Please answer the following questions. Write your answers clearly on the midterm. You can achieve a total 100 points. There are 6 short questions followed by three long questions. You should read all of the questions first. There is a blank page attached at the end of the midterm to be used as scratch paper. GOOD LUCK! NAME ………………………………………………………. NUMBER …………………………………………………… (This table is for the instructor use only) Total Short Questions Long Questions I Long Questions II Long Questions III Total
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SHORT QUESTIONS (15 points, 2.5 points each) Please state whether the following two statements are TRUE or FALSE with a short explanation (3 or 4 lines). True, false answer 1 point, correct explanation 1.5 points. 1) In the medium run, a permanent increase in the nominal money growth of, say 10%, is reflected in a 10% increase in the inflation rate, leaving the output level and investments constant. (TRUE / FALSE) ……………………………………………………………………………… ……………………………………………………………………………… ……………………………………………………………………………… 2) The Phillips Curve, in all its forms, says that the rate of unemployment can only be different from the natural one if agents are surprised by inflation. (TRUE/FALSE) …………………………………………………………………………………… …………………………………………………………………………………… …………………………………………………………………………………… 3) Suppose that E (nominal exchange rate, 1TL=E$) increases by 4%, This will result in a real appreciation if and only if price level in the domestic country increases more than 4%. (TRUE/FALSE) …………………………………………………………………………………….
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This note was uploaded on 03/22/2012 for the course ECONOMICS 202 taught by Professor Pinarderingure during the Spring '12 term at Middle East Technical University.

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Midterm II - ECON 514 Macroeconomic Theory and Policy Fall...

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