Econ_199_Aut_06_Exam___2

Econ_199_Aut_06_Exam___2 - Introduction to Macroeconomics...

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Allen R. Sanderson Economics 19900 Autumn 2006 SECOND HOUR EXAMINATION Name (Please Print): ______________________________________ [40 Points Possible] Part I. Multiple Choice. Circle letter corresponding to your answer. One point each; 20 points total. 1 If the real rate of interest is 4 percent and the inflation rate is 3 percent, then the nominal interest rate is approximately: a. 3% - 4%, or -1%. b. 4% - 3%, or 1%. c. (4% + 3%)/2, or 3.5%. d. 4%/3%, or 1.33%. e. 4% + 3%, or 7%. 2. The amount of investment spending is inversely related to: a. changes in technology. b. the expansion phase of the business cycle. c. the real interest rate. d. tax rates. e. the expected profit rate. changes in technology. 3. Paying efficiency wages: a. means that firms cannot attract more productive workers, and the workers they do attract will be more likely to quit. b. has approximately the same effect on the unemployment rate as job rationing. c. will lower the amount of job search that prospective employees engage in. d. will reduce the natural rate of unemployment. e. will decrease the quantity of labor supplied and increase the quantity of labor demanded. 4. According to Parkin, which of the following would increase (that is, shift rightward) aggregate demand? a. a decrease in expected future incomes b. a fall in the price level c. a rise in the expected future inflation rate d. a decrease in government spending on goods and services e. lower rates of economic growth in Asia and Europe 5. The idea that a government budget deficit decreases investment spending is called: a. the Ricardo-Barro effect. b. the dissaving effect. c. the Laffer effect. d. the crowding-out effect. e. the supply-side effect. 6. Along any AD curve, a decrease in the quantity of real GDP demanded could only be the result of: a. an increase in the price level. b. a decrease in income. c. contractionary fiscal policy. d. a slowdown in the rate of technological change. e. a drop in the money supply. 1
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This test prep was uploaded on 04/07/2008 for the course ECON 199 taught by Professor Sanderson during the Fall '07 term at UChicago.

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Econ_199_Aut_06_Exam___2 - Introduction to Macroeconomics...

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