201_Winter08_Final%20Solutions

201_Winter08_Final%20Solutions - Econ 201 — Final —...

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Unformatted text preview: 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: (a) It is easy to write 30 pages in 2 days (b) It is easy to write 2 pages in 30 days (c) It is easy to write 2 pages in 2 days (d) It is easy to write 30 pages in 30 days (e) (a) and (b) (f) (c) and (d) 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? (a) The dollar appreciated by 19.3% (b) The dollar appreciated by 17.6% (c) The dollar depreciated by 17.6% (d) The dollar depreciated by 19.3% 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? (a) Quantity will go up, interest rates will go up. (b) Quantity will go up, interest rates will go down. (c) Quantity will go down, interest rates will go up. (d) Quantity will go down, interest rates will go down. 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? (a) $200 (b) $800 (c) $1000 (d) $2400 Pg. 2 7. Consider the market for loanable funds. Other things being equal, an increase in taxes on savings and investment income will: (a) shift demand to the right and increase the interest rate. (b) shift demand to the left and decrease the interest rate. (c) shift supply to the right and decrease the interest rate. (d) shift supply to the left and increase the interest rate. 8. American jobs are lost to: (a) China in manufacturing (b) China in information technology services (c) India in manufacturing (d) India in information technology services (e) (b) and (c) (f) (a) and (d) 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) 10. An example of a double coincidence of wants is: (a) a car mechanic who wants a TV finding an owner of an electronics store who wants a car repaired....
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This note was uploaded on 04/07/2008 for the course ECON 201 taught by Professor Witte during the Winter '08 term at Northwestern.

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201_Winter08_Final%20Solutions - Econ 201 — Final —...

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