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Final

ECON 201 Final: FINAL!!!


Department
Economics
Course Code
ECON 201
Professor
Sarna
Study Guide
Final

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MacroeconomicsFinalExam
MultipleChoice
Identifytheletterofthechoicethatbestcompletesthestatementoranswersthequestion.
____ 1. Abankhasa10percentreserverequirement,$4,000indeposits,andhasloanedoutallitcangiventhe
reserverequirement.
a.
Ithas$40inreservesand$3,960inloans.
b.
Ithas$400inreservesand$3,600inloans.
c.
Ithas$444inreservesand$3,556inloans.
d.
Noneoftheaboveiscorrect.
____ 2. Considerasmalleconomyinwhichconsumersbuyonlytwogoods:applesandpears.Inordertocompute
theconsumerpriceindexforthiseconomyfortwoormoreconsecutiveyears,weassumethat
a.
thenumberofapplesboughtbythetypicalconsumerisequaltothenumberofpears
boughtbythetypicalconsumerineachyear.
b.
neitherthenumberofapplesnorthenumberofpearsboughtbythetypicalconsumer
changesfromyeartoyear.
c.
thepercentagechangeinthepriceofapplesisequaltothepercentagechangeinthe
priceofpearsfromyeartoyear.
d.
neitherthepriceofapplesnorthepriceofpearschangesfromyeartoyear.
____ 3. Ifthebudgetdeficitincreases,then
a.
anincreaseintheinterestrateincreasesnetcapitaloutflow.
b.
anincreaseintheinterestratedecreasesnetcapitaloutflow.
c.
adecreaseintheinterestrateincreasesnetcapitaloutflow.
d.
adecreaseintheinterestratedecreasesnetcapitaloutflow.
____ 4. TodecreasetheinterestratetheFederalReservecould
a.
buybonds.Thefallintheinterestratewouldincreaseinvestmentspending.
b.
buybonds.Thefallintheinterestratewoulddecreaseinvestmentspending.
c.
sellbonds.Thefallintheinterestratewouldincreaseinvestmentspending
d.
sellbonds.Thefallintheinterestratewoulddecreaseinvestmentspending.
Thediagrambelowrepresentsthemarketforloanablefundsandthemarketforforeigncurrencyexchange
inMexico.Usethediagramtoanswerthefollowingquestions.
Figure327
____ 5. RefertoFigure327.SupposingthattheMexicaneconomystartsatr
0
andE
1
.Whichofthefollowingis
consistentwiththeeffectsofcapitalflight?

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a.
theshiftfromD
0
toD
1
inPanelA
b.
theshiftfromNCO
0
toNCO
1
inPanelB
c.
theshiftfromS
0
toS
1
inPanelC
d.
Alloftheaboveshiftsareconsistentwiththeeffectsofcapitalflight.
____ 6. RefertoFigure327.SupposetheMexicaneconomystartsatr
0
andE
1
.Whichofthefollowingnew
equilibriumisconsistentwithcapitalflight?
a.
r
o
andE
0
b.
r
1
andE
0
c.
r
1
andE
1
d.
Noneoftheaboveiscorrect.
____ 7. RefertoFigure327.WhichofthefollowingisconsistentwithcapitalflightfromMexico?
a.
TherealexchangerateofthepesoappreciatesfromE
0
toE
1
.
b.
TherealexchangerateofthepesodepreciatesfromE
0
toE
1
.
c.
TherealexchangerateofthepesoappreciatesfromE
1
toE
0
.
d.
TherealexchangerateofthepesodepreciatesfromE
1
toE
0
.
____ 8. Whichofthefollowingcorrectlyexplainsthecrowdingouteffect?
a.
Anincreaseingovernmentexpendituresdecreasestheinterestrateandsoincreases
investmentspending.
b.
Anincreaseingovernmentexpendituresincreasestheinterestrateandsoreduces
investmentspending.
c.
Adecreaseingovernmentexpendituresincreasestheinterestrateandsoincreases
investmentspending.
d.
Adecreaseingovernmentexpendituresdecreasestheinterestrateandsoreduces
investmentspending.
Table293.
TheFirstBankofFairfield
Assets
Liabilities
Reserves$2,000
Deposits$10,000
Loans8,000
____ 9. RefertoTable293.If$1,000isdepositedintotheFirstBankofFairfield,andthebanktakesnoother
actions,its
a.
reserveswillincreaseby$200.
b.
liabilitieswilldecreaseby$1,000.
c.
assetswillincreaseby$1,000.

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d.
reserveswillincreaseby$800.
____ 10. RefertoTable293.StartingfromthesituationasdepictedbytheTaccount,ifsomeonedeposits$500
intotheFirstBankofFairfield,andifthebankmakesnewloanssoastokeepitsreserveratiounchanged,
thentheamountofnewloansthatitmakeswillbe
a.
$320.
b.
$400.
c.
$680.
d.
$750.
____ 11. RefertoTable293.Thereserveratioforthisbankis
a.
0percent.
b.
20percent.
c.
80percent.
d.
100percent.
____ 12. Whichofthefollowingsequencesbestexplainsthenegativeslopeoftheaggregatedemandcurve?
a.
pricelevel demandformoney equilibriuminterestrate quantityof
goodsandservicesdemanded
b.
pricelevel demandformoney equilibriuminterestrate quantityof
goodsandservicesdemanded
c.
pricelevel demandformoney equilibriuminterestrate quantityof
goodsandservicesdemanded
d.
pricelevel equilibriuminterestrate demandformoney quantityof
goodsandservicesdemanded
____ 13. Efficiencywages,minimumwagelaws,andunionsall
a.
keepwagesbelowtheequilibriumlevel,causingashortageoflabor.
b.
keepwagesbelowtheequilibriumlevel,causingasurplusoflabor.
c.
keepwagesabovetheequilibriumlevel,causingashortageoflabor.
d.
keepwagesabovetheequilibriumlevel,causingasurplusoflabor.
Forthefollowingquestions,usethediagrambelow:
Figure347.
____ 14. RefertoFigure347.Iftheeconomyisatpointb,apolicytorestorefullemploymentwouldbe
a.
anincreaseinthemoneysupply.
b.
adecreaseingovernmentpurchases.
c.
anincreaseintaxes.
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