Economics 301 Intermediate Macroeconomics Exam #1 Fall, 2013 Prof. Twomey Please print your brands on the back side of the last sheet. Answer in these sheets, using the backside of the bedsheets if you need extra space. The weight of every question can be indicated. Please ask for filtration if any question is usually unclear. Period: the entire category. 1) Determine the following which has a sentence or perhaps at most two (20 points): a. Endogenous variable
w. Classical dichotomy
c. National income accounts identity
deb. (Distinguish between) Employment charge and the Labor Force Participation Level e. Fisher effect
installment payments on your (20 points) Consider the standard closed economy full job model that we have studied – sometimes known as the loanable funds model. Draw a graph showing the determination of the actual rate of interest, as described by that model. Be sure to determine the names of every axis, and label the curves. Make clear and illustrate on that graph what are the results in the macro-economy if the amount of government spending falls. - In that circumstance, what happens to: (explain real briefly) Real GDP
The real interest rate
Personal sector Purchase
The government's Deficit
If within a slightly different community, private financial savings positively responds to increases in rates of interest; will the effect on consumption be bigger or smaller?
several. (10 points) An economic system initially has a monetary bottom of 1, 1000 one dollars bills. Estimate the money supply in every scenario: a. All cash Is kept as money
b. Every money is definitely held while demand deposit.
Banks hold 20 % of deposits in reserves.
c. People hold equal levels of currency and demand deposit. Banks hold 20% of deposits while reserves.
4. (10 points) Suppose a rustic has a money demand function (M/P)d = kY, in which ‘k' is a constant variable. The money source grows by 15% per year, and genuine income develops by five per cent per year. a) What is the typical annual inflation rate?
w. How will inflation vary if actual income growth were bigger? Explain in short ,. c. Guess that instead of a constant money demand function, the speed of money difficult was growing steadily as a result of financial development. How would that impact the inflation price? Explain briefly.
5. (10 points) Will need to each of the following events be anticipated to increase or decrease actual GDP. Every time, do you think financial well-being changes in the same direction since real GROSS DOMESTIC PRODUCT? Why or perhaps why not? I. A major power-outage forces Vegas to dis-continue gambling procedures for a month. II. The discovery of any new, easy-to-grow (and environmentally neutral) stress of wheat or grain increases plantation harvests. III. Improved labor-management relations minimizes the regularity of labor strikes. IV. More students drop out of school to take careers mowing yards.
6. (10 points) Exactly what the three features of money? Which of these capabilities do the subsequent satisfy, and which not really? a. Credit cards
b. A subway expression
c. A painting by simply Rembrandt
six. (10 points) Suppose UM-D engineers produce a method of creating automobile machines that are considerably more efficient, which this new technique is adopted simply by U. T. automobile suppliers, who build new production facilities to utilize it. a. How can this impact the country's demand for investments? b. Explain, and have absolutely on a chart, how this will affect the genuine rate of interest, and the national degree of saving.
almost eight. (10 points) Explain just how each of the following will affect the monetary foundation, the money multiplier, and the cash supply. a. The National Reserve reduces the interest price it pays banking institutions for holding reserves w. Rumors of a computer virus harm on ATMs increase the amount of cash that that people hold while currency, rather than demand deposit. c. The Federal Arrange sells a genuine in wide open market operations.
The typical on this test was 65; the excessive was 88.
Econ 301 Exam #2 Fall, 2013 Professor Twomey Please printing your...