ECON 1120 Midterm: Econ 1120_2013Fall_prelim2_MakeUp
1
ECON 1120 – INTRO MACRO – Fall-2013 –November 18, 2013
PRELIM #2 (Make-up)
PRINT YOUR NAME: ____________________________________ Your C.U. NetID: _____________
YOUR C.U. STUDENT NUMBER: ____________________________
Check YOUR TA’s NAME:
_____________TA = Naoko Iida (Friday sections)
_____________TA = Donghwee Kwon (Tuesday sections)
_____________TA = Jongrim Ha (Thursday sections)
_____________TA = Bryce Little (Wednesday sections)
INSTRUCTIONS:
• There are two parts in this exam.
o Part I: 18 multiple choice questions @ 3 points each (54 points)
o Part II: 4 short essay questions (46 points)
• ANSWER ALL QUESTIONS. TOTAL POINTS=100. TOTAL TIME=90 minutes.
• Prelim2 score weights 25% of final grade.
• You will have five bluebooks. Write your ID, name on the front page of EACH book.
• On the top of the front page, write “Multiple Choice,” “Essay Q1,” “Essay Q2,” “Essay Q3,” and
“Essay Q4,” respectively.
• Write down your answers in different bluebooks. Your contents should match with the title of the
bluebook.
• Read all questions carefully.
• Write legibly and remember to label all graphs and axes in diagrams
EXAM TAKING POLICY:
• NO QUESTIONS CAN BE ASKED DURING THE EXAM ABOUT EXAM CONTENT: If you need
to use the restroom, or you need a pencil or scratch paper, or some other supply that we might have,
raise your hand and wait for the proctor to come to you. Only one person can be out of the examination
room at a time, and the proctor will hold onto your exam papers while you are out at the restroom.
• NO CELL PHONES. NO CALCULATORS. NO INTERNET-ACCESSIBLE DEVICES.
• NO BOOKS. NO NOTES. NO HELP SHEETS.
2
Part I: Multiple Choice Questions.
1. Suppose the price of oil decreases and at the same time the Fed raises the discount rate. Which of the
following is most likely to happen?
A) AD curve shifts to the right and AS curve shifts to the right.
B) AD curve shifts to the right and AS curve shifts to the left.
C) AD curve shifts to the left and AS curve shifts to the right.
D) AD curve shifts to the left and AS curve shifts to the left.
2. Suppose you are the chairman of the Federal Reserve, so you can adjust the federal funds rate. Suppose
further the current inflation rate is 2% and the federal funds rate is also 2%. If you increase the federal funds
rate, then you can _________ inflation, and you will also _______ unemployment for a while.
A) lower; push up
B) lower; lower
C) push up; lower
D) push up; push up
E) lower; stabilize
F) stabilize; lower
3. When unemployment moves below the non-accelerating inflation rate of unemployment (NAIRU), which of
the following statements is true?
A) Inflation risk appears to be rising.
B) The government is going to announce a tax cut.
C) The Fed is likely to lower interest rates to stabilize the situation.
D) The level of potential GDP will increase.
4. Which theory can explain the upward-sloping aggregate supply curve?
A) The life cycle model of consumption
B) The fact that the Fed only has control of short term interest rates
C) Inventory adjustments
D) Sticky wages
E) None of the above
F) All of the above
3
5. An increase in successful R&D will most likely result in which of the following changes in the short-run
and the long-run aggregate supply curves and the long-run Phillips curve?
SR AS curve LR AS curve LR Phillips curve
A) remains remains shifts to the left
B) remains shifts to the right remains
C) shifts to the right remains shifts to the right
D) shifts to the right shifts to the right shifts to the left
6. In 1986, the U.S. congress passed the Gramm-Rudman-Hollings act. The law created a policy mechanism
that would automatically __________ government spending with the intention to __________ the budget
deficit.
A) increase; decrease
B) increase; increase
C) decrease; increase
D) decrease; decrease
7. A _______ is a fractional claim of ownership on a firm.
A) bond
B) stock
C) dividend
D) capital gain
8. During a recession, a government uses fiscal policy to expedite an economic recovery by passing a spending
bill. Critics of the bill think the spending would help, but there could be a substantial delay before the
allotted funds enter the economy, potentially stimulating an economy that has already recovered. The
critic’s primary issue regarding the efficacy of the spending bill can be summarized as the duration of a:
A) response lag
B) recognition lag
C) implementation lag
D) political lag
Document Summary
Econ 1120 intro macro fall-2013 november 18, 2013. Instructions: there are two parts in this exam, part i: 18 multiple choice questions @ 3 points each (54 points, part ii: 4 short essay questions (46 points, answer all questions. Total time=90 minutes: prelim2 score weights 25% of final grade, you will have five bluebooks. Write your id, name on the front page of each book: on the top of the front page, write multiple choice, essay q1, essay q2, essay q3, and. Essay q4, respectively: write down your answers in different bluebooks. Your contents should match with the title of the bluebook: read all questions carefully, write legibly and remember to label all graphs and axes in diagrams. Only one person can be out of the examination room at a time, and the proctor will hold onto your exam papers while you are out at the restroom: no cell phones.
