38 questions

NAME(Please Print):__________________________________________________________
EC 201-Principles of Macroeconomics
Due Wedneday, 7/10/19 at Start of Class
Final Exam-Summer 2019
NAME (Please Print):__________________________________________________________
Instructions: Please answer ALL of the Questions from 1 to 34 Below. You may use your text or lecture notes, but you must not work with another econ student, past or present. You must bring your exam by 6pm on the due date of the exam. The Final Exam is due at 6pm on Wednesday, July 10. Good Luck and enjoy your summer!
Chapter 14
1.
Over the past two decades, the United States has
a.
generally had, or been very near to a trade balance.
b.
had trade deficits in about as many years as it has trade surpluses.
c.
persistently had a trade deficit.
d.
persistently had a trade surplus.
2.
In the open-economy macroeconomic model, the market for loanable funds identity can be written as
a.
S = I
b.
S = NCO
c.
S = I + NCO
d.
S + I = NCO
Figure 1.
3.
Refer to Figure 1 above. Which of the following shifts show the effects of an import quota?
a.
shifting the middle supply curve in panel c to the one to its left.
b.
shifting the demand curve from the right to the left in panel c.
c.
shifting the demand curve from the left to the right in panel c.
d.
None of the above is correct.
4.
Refer to Figure 1 above. If the interest rate were initially at r2 and an import quota were imposed, the interest rate would
a.
stay at r2.
b.
decrease because supply would shift right.
c.
increase because supply would shift left.
d.
decrease because demand would shift left.
5.
Refer to Figure 1 abvove. If the economy were initially in equilibrium at r2 and E3 and the government removed import quotas, the exchange rate would
a.
appreciate to E4.
b.
appreciate to E2.
c.
depreciate to E1.
d.
depreciate to E2.
6.
Suppose that U.S. citizens start saving more. What does this imply about the supply of loanable funds and the equilibrium real interest rate? What happens to the real exchange rate? (3 points)
This increases the supply of loanable funds in the economy and decreases the real interest rate. Decreased exchange rates decrease capital outflow and cause the real exchange rate of the dollar to depreciate.
Chapter 15
7. Aggregate demand shifts to the left if the money supply decreases. (True or False)
True
8. Which of the following adjusts to bring aggregate supply and demand into balance?
a.
the price level and real output
b.
the real rate of interest and the money supply
c.
government expenditures and taxes
d.
the saving rate and net exports
9. Other things the same, the aggregate quantity of goods demanded decreases if
a.
real wealth falls.
b.
the interest rate rises.
c.
the dollar appreciates.
d.
All of the above are correct.
10. State at least 4 variables besides real GDP tend to decline during recessions? Given the definition of real GDP, argue that declines in these variables are to be expected. (5 points)
The 4 variables besides real GDP tend to decline during recessions are:
1. Employment
2. Incomes
3. Investment
4. Sales
GDP is the measured of either the production of, expenditure on, or income generated from final goods and services. It follows that any other variables that could be used to measure, production, expenditures, or income will generally move in the same direction as GDP.
11. Make a list of at least 5 things that would shift the aggregate demand curve to the right. (5 Points)
Figure 2.
The things that would shift the aggregate demand curve to the right are as follows:
1. Increase in consumption spending by households.
2. Increase in investment by firms and businesses with in the economy.
3. Increase in government purchases or spending.
4. Increase in exports of country while an import remains same. This will increase the net exports and thereby increase the aggregate demand.
5. Exports remain same but imports decline. This will also increase the net exports and thereby increase the aggregate demand.
12. Refer to Figure 2 above. An increase in the money supply would move the economy from C to
a.
B in the short run and the long run.
b.
D in the short run and the long run.
c.
B in the short run and A in the long run.
d.
D in the short run and C in the long run.
13. Refer to Figure 2 above. If the economy is at A and there is a fall in aggregate demand, in the short run the economy
a.
stays at A.
b.
moves to B.
c.
moves to C.
d.
moves to D.
14. During recessions which type of spending...