Final Exam for Proctor EC141Spring2 2012 (2) - EC 141 DLD...

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Elementary and Intermediate Algebra
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Chapter 1 / Exercise 86
Elementary and Intermediate Algebra
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EC 141 DLD Spring2 2012: Final ExamName ___________________________________________________30 Multiple Choice Questions (5 points each = 150points)5 Short Answer Questions (30 points each = 150 points)Total Points = 300 pointsMultiple Choice Directions: Identify the correct answer from the options listed. Write the letter corresponding to your answer on the blank next to the question number on the answer sheet. Make sure that you put the right answer in the correct blank. (5 points each)ANSWER SHEET FOR MULTIPLE CHOICE:1.112121222313234142451525616267172781828919291020301
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Elementary and Intermediate Algebra
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Chapter 1 / Exercise 86
Elementary and Intermediate Algebra
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EC141 Final ExamName________________________________________________Short Answer Questions (30 Points Each)1.Explain: “Unemployment can be caused by a decrease of aggregate demand or a decrease of aggregate supply.” In each case, specify price-level outcomes. 2.Briefly state and evaluate the problem of time lags in enacting and applying fiscal policy. How might “politics” complicate fiscal policy? How might expectations of a near-term policy reversal weaken fiscal policy based on changes in tax rates? What is the crowding-out effect, and why might it be relevant to fiscal policy? 2
3.Suppose that you are a member of the Board of Governors of the Federal Reserve System. The economy is experiencing a sharp and prolonged inflationary trend. What changes in (a) the reserve ratio, (b) the discount rate, (c) open-market operations, and (d) the amount of reserves offered at the term auction facility would you recommend? Explain in each case how the change you advocate would affect commercial bank reserves, the money supply, interest rates, and aggregate demand.4.What are the three basic functions of money? Describe how rapid inflation can undermine money’s ability to perform each of the three functions.5.Why are only final goods counted in measuring GDP for a particular year? Why is the value of 3
used furniture that’s bought and sold not counted? 4
EC 141 Final Exam1.Macroeconomics focuses on:

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