ECON 311
Sample Short Answer Questions
1.
The housing bubble bursting caused some people to default on their mortgages and the banks to foreclose on their homes. Draw
and explain how this was the start of a downward cycle in the housing market.
2.
Briefly
Bonus Quiz Solutions
1. There would be a unique product for which there are few close substitutes under which market
model?
A. Monopolistic competition
B. Pure competition
C. Pure monopoly
D. Oligopoly
2. There is no control over price by firms in:
A. oli
National Income Accounting Formulas and Supplemental Notes (Chapter 7)
Using the resources available to you (text, workbook, and notes) be able to define each element of the
equations below.
GDP = C + I + G + (Exports Imports)
GDP = NI NFFI + CCA + IBT
ND
ECON/FINA 301 Money and Banking - Midterm 2, October, 2013
Name:
1. (4 points each) Imagine two people want to write a mortgage contract in terms of the nominal interest rate so
as to achieve an expected real interest rate of 1% when ination is expected t
ECON/FINA 301 Money and Banking - Final, December, 2013
Name:
1. (4 points each) The expectations-augmented Phillips curve model.
(a) Draw the long-run and short-run Phillips curves in the same diagram, carefully labeling everything and
briey explaining w
Portfolio game
This game is worth 5% of your final grade, with your score being based in part on how
your portfolio performs over the semester. Note that you need to register by Thursday
January 23rd, at which time registration closes. Registering and pla
1.
a) See gure 17.15 in the textbook. In the long-run unemployment will be
at its natural rate no matter what ination is, so the long-run curve is vertical.
In the short-run, there is a trade-o between ination and unemployment,
so the curve slopes downwar
1.
a)
i = r + e = 1% + 2% = 3%
b)
rr = i = 3% 1% = 2%
rr = i = 3% 4% = 1%
c) From above, we see that the expected real interest rate was 1%, but the
realized would be -1%, which is lower. Hence, the borrower is better o, since
he pays less than expected,
Returns
pn = probability of outcome n
xn = return outcome n
Real interest rates
i = nominal interest rate
rr = realized real interest rate
r = expected real interest rate
= ination rate
e = expected ination rate
rra = after-tax realized real interest ra
ECON/FINA 301 Money and Banking,
Spring 2014, University of South Carolina
Instructor: Chris Jensen
E-mail: [email protected]
Office: BA 418
Assistant: Eun Son Lim ([email protected])
Lectures: Tuesday and Thursday 11.40-12.55 in BA 450
Office hours: