Econ 311 Midterm_2_Solutions

Econ 311 Midterm_2_Solutions - Intermediate Macroeconomics...

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Intermediate Macroeconomics 311 (Professor Gordon) Second Mid-Term Examination Fall, 2007 YOUR NAME: Circle the TA session you are attending: Costel Friday 9AM Costel Friday 3PM Jerry Friday 9AM Jerry Friday 3PM INSTRUCTIONS: 1. The exam lasts 1 hour. 2. The exam is worth 60 points in total: 30 points for the two analytical questions, and 30 points for the multiple choice questions. 3. Write your answers to Part A (the multiple choice section) in the blanks on page 1. You won’t get credit for circled answers in the multiple choice section. 4. Place all of your answers for part B in the space provided. 5. You must show your work for part B questions. There is no need to explain your answers for the multiple choice questions. 6. Good Luck! PART A Answer multiple choice questions in the space provided below. USE CAPITAL LETTERS. 1. _ _A __ 6. __D_ _ 11. __C__ 16. _A _ __ 21. _ _A __ 26. _ _C __ 2. _ _A __ 7. __D_ _ 12. _ _E _ 17. _ _B __ 22. _ _A _ 27. _ C _ 3. __B_ _ 8. _ _A __ 13. __B__ 18. _ _C __ 23. _ _E __ 28. _ _C _ 4. __A_ _ 9. _ _E_ _ 14. _ C _ _ 19. _ _C __ 24. _ _C __ 29. _ _B __ 5. _ _B __ 10. _ _E __ 15. _ ABD _ 20. _ _D __ 25. _ _D __ 30. _ _A _
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1. A nation’s net international investment position is (a) the difference between all foreign assets owned by a nation’s citizens and domestic assets owned by foreign citizens. (b) the difference between its exports of goods and services and its import of goods and services. (c) identical to its current account balance. (d) unaffected by policy driven interest rate changes 2. The relation S + (T – G) = I + NX describing the equilibrium of an economy explicitly demonstrates (a) deficit spending by the government reduces either investment and/or net foreign investment. (b) deficit spending reduces private saving (assuming net foreign investment remains unchanged). (c) as private saving increases net foreign investment must decrease, exports decline. (d) as private saving increases the deficit must decline if investment decreases. 3. During the second quarter of 1989 it is believed that Japanese investors bought a significant proportion of U.S. corporate stocks and bonds sold during this period. The required purchase of dollars (a) reduced the trade deficit of that year. (b) provided yen to purchase imported goods by U.S. citizens. (c) led to a trade surplus for that year. (d) led to a trade deficit for that year. 4. If the interest responsiveness of business firms investment is great then the (a) IS curve is flatter and the AD curve is flatter. (b) IS curve is steeper and the AD curve is steeper. (c) IS curve is horizontal and the AD curve is perfectly vertical. (d) IS curve is horizontal and the AD curve is perfectly horizontal 5. When the expected rate of inflation falls, the short-run Phillips curve (a) shifts upward. (b)
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Econ 311 Midterm_2_Solutions - Intermediate Macroeconomics...

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