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Econ 311 Quiz 5 solutions

Econ 311 Quiz 5 solutions - Intermediate Macroeconomics...

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Intermediate Macroeconomics 311 (Professor Gordon) Quiz 5: November 30, 2007; 9AM Note : This is a closed book assignment. You may use calculators. YOUR NAME: ________________________________ Directions : Answer each of the following questions. You must show all your work. Partial credit will be awarded (but it will be easier to do so if you show your work!). QUESTION 1: Multiple Choice (9 Points) Choose the one alternative that best completes the statement or answers the question. 1) Inflation has no effect on an economy's well-being if A) the nominal rate of interest for both savers and borrowers rises by an amount just equal to the rate of inflation. B) Only real (not nominal) interest income is taxable . C) it is universally and accurately anticipated. D) all of these 2) The real rate of interest 3) The actual real interest rate and the expected real interest rate will be identical if 4) "Natural unemployment" is not zero because includes those out of work because of
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