345 2012 MT with answers

longer 1s time to stronger rise b l weaker fall c

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Unformatted text preview: rise b l weaker, fall c ) stronger, fall weaker. rise d .) 30. Consider an aggregate short run setting where second period incomes fall. first period incomes constant. Prices arc assumedfixcd and money demand is very insensitive to interest rate changes. The optimal policy action is to _ _ _ the money supply. a.) b.) c .) increase decrease leave constant Econ 345 - Newman - 2012 Midterm Multiple Choice Solutions 1. A 2. C 3. A 4. C 5. D 6. A 7. A 8. B 9. D 10. C 11. C 12. A 13. A 14. A 15. B 16. B 17. B 18. D 19. C 20. B 21. C 22. A 23. B 24. B 25. A 26. D 27. C 28. A 29. D 30. B Partial Solutions, Score: 11/15 Use for reference only. Answers may not be entirely correct. 4'l 41, Llz 4i', { q, Section B: Longer Answer Questions: DO BOTH QUESTIONS: 2 x 15 points:30 (a) Using your three market analysis consumption-only model with flexible prices, show the full effects of a decline in./irst perig:lljllcomes (second period incomes constant) on current equilibrium outcomes in the goods, bond, and money markets. Show all shifts clearly and make a chart summa...
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