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201_Winter08_Final%20Solutions

# 201_Winter08_Final%20Solutions - Econ 201 Final Winter 2008...

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Econ 201 — Final — Winter 2008 — SOLUTIONS 1 Multiple Choice - 50 Points (In this section each question is worth 1 point) 1. Suppose a waiter deposits his cash tips into his savings account. As a result of only this transaction: (a) M2 increases. (b) M1 decreases. (c) M2 decreases. (d) M3 increases. 2. Mark Twain said: 3. On 11/04/04, a euro was worth \$1.287, and on 03/07/08, a euro was worth \$1.535. Using natural logarithms to calculate the total percent change between these two dates (not annu- alized), which is true? 4. Suppose the economy is in equilibrium and the central bank sells bonds. What happens to the equilibrium quantity of money and interest rates in the short term? 5. The survey that produces the monthly data on the unemployment rate is based on (a) A survey of employers (b) A survey of employees (c) A survey of households (d) A survey of individuals (e) (b) and (d) (f) (a) and (c) 6. Suppose that Crimson Bank has excess reserves of \$800 and the reserve ratio is 20%. If Niels deposits \$1,000 of cash into his checking account at Crimson Bank, and then Crimson Bank lends \$600 to Mary, what is the most that Crimson Bank can lend to Professor Gordon?

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Pg. 2 7. Consider the market for loanable funds. Other things being equal, an increase in taxes on savings and investment income will: 8. American jobs are lost to: 9. Which of the following will not cause the AD curve to shift to the left? (a) Higher income tax rate (b) Lower stock of physical capital (c) Open-market purchase (d) Lower government spending (e) (b) and (c)
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