Um-d econ 301 Exams
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b) auction market c) direct crowding out d) supply shock e) liquidity trap
supply curve), assume that the government increases its expenditures, financing this with bond sales. What happens to: a) prices b) interest rates c) real output d) consumption e) investment f) the money supply g) the deficit 3a. What determines the slope of the LM curve? Explain, illustrating with a graph. b. In what sense is the situation in which the LM is vertical a "classical case?" c. What is monetary accommodation? Illustrate with a graph.
money wages are variable. How does an increase in expected prices affect the labor market and the aggregate supply schedule. Explain, illustrating with a graph for each market. b. Why is the aggregate demand curve downward sloping? Explain, illustrating with a graph. 5. What is Friedman's constant growth rate rule? Which of the following strengthen the case for implementing that rule, and which worsen it? Explain briefly. a. A stable or an unstable velocity of money b a steep or a flat IS curve c a stable or an unstable demand for money d. accurate or inaccurate forecasts of the main economy aggregates The median on this exam was 60. The high was 94 Econ 301 Exam #3 Fall, 1994 Professor Twomey Please PRINT your name on the BACK of the LAST sheet. Answer on both sides of these sheets, as necessary. Ask for clarification of any unclear question. Questions are equally weighted. Good luck.
a) natural rate b) policy ineffectiveness postulate c) hysteresis d) transitory income e) efficiency wage
capital.
How will government fiscal (or monetary) policy affect each of those three components, if at all? Explain briefly. What is the difference between intendedand unintended inventory accumulation, and why might it be important? 3a). Explain and illustrate with a graph (or two) how the predictions would differ between a Keynesian and a New Classical Economist, as to what would happen be the short term effect in the labor market if there were an expected increase in the money supply. According to our text, with which - if any - of these two visions would a monetarist agree, and why? 4a). Show on a graph how, according to the Life Cycle Hypothesis, a person's savings would be expected to change over time. Explain briefly how that relationship would change if: a) social security programs were eliminated b) there were a stock market crash during the person's middle age c) the person were poor and did not have good access to capital markets as a youth
called real business cycle and new keynesian. The following are some factors which, according to one (or both) theory(ies), will affect output and employment. For each one, identify which model, state how the factor would affect output and employment, and explain the reasoning used by the particular school. Sometimes graphs help in these explanations. i) There is a decline in unionization in the economy's labor force ii) due to a cultural change, people value leisure more, and consumption less, than was previously the case. iii) there is a technology shock caused by bad weather iv) production technology changes such that it is easier to verify if a worker is loafing on the job v) the personal income tax is reduced
are equally weighted; if any question is unclear, please ask for clarification. Use the backs of these sheets if you need space. Time: unlimited - about one hour. 1. Identify the following with a sentence or at most two: a) endogenous growth b) Partisan Theory c) Open Market Desk d) Ricardian equivalence e) Structural Deficit 2. Suppose the Federal Reserve is using an interest rate as an intermediate target, while real income is the ultimate policy target, and there is an autonomous drop in business investment that the Federal Reserve had not predicted. Use the IS-LM model to show the effects of the shock. Would income have been affected more or less if the Federal Reserve were using a money stock target?
interpretations of the demand for money; the Inventory Theoretic Approach and Tobin's portfolio diversification. Without using graphs or fancy formulas, what are the major factors each theory utilizes to explain the demand for money? b. What is meant by instability of the demand for money in the U.S. economy during the 1970s and 1980s, and which of the factors discussed above in the first part of this question are felt to be most important in explaining that instability?
make their decisions with a disinterested view of what is best for the economy as a whole, and assert that the officials are simply vote maximizers. Bad policies, it is argued, result from bad votes. Identify and discuss three versions of the types of voter behavior which lead to this result. Is this version of voters consistent with rational expectations view of us as economic decision makers? b. Explain the concept of the money multiplier. What are the major economic factors which determine its size? 5. In the textbook's discussion of supply side economics, major attention is focused on the role of taxes. Explain (and illustrate with a graph) the argument that taxes reduce each of savings and investment. Is the focus on savings and investment in agreement with the findings of Denison on the major sources of economic growth for the United States? Explain. Identify one other economic variable that Supply Siders feel is important for growth of the economy, and that they believe is significantly hindered by taxes which are "too high." Explain the link between taxes and this factor.
ECON 301 Fall, 1992 Exam #1 Professor Twomey Please PRINT your name on the BACK of the last sheet. Answer on these sheets, using the backs if necessary. Ask for clarification of any unclear question. Questions are equally weighted. Time: 1 hour. Good luck. 1. Identify the following with a sentence or at most two: a). twin deficits b) capital account c) natural rate of unemployment d) distinguish between induced and autonomous taxes e) distinguish between exogenous and endogenous variables 2a. Define crowding out. Answer with a graph and a short explanation: b) When is there more crowding out, with a steep aggregate supply curve, or a flat one? c) Is crowding out greater if the LM is steep or flat? d) Is crowding out greater if the wealth effect on the demand for money is
large or small? 3. In the text, as well as in class, we contrasted the IS-LM analyis of a closed economy, which does not engage in foreign trade, with that of a small open economy with a fixed exchange rate. In which case will monetary policy be more effective? Show with a pair of graphs. 4a. If Consumption = 100 + 0.9Disposable Income and Taxes = 25 + 0.25Income, What is the value of the multiplier? By how much does income change if government expenditures increase by 50? b. Here's a hard one. The normal derivation of the IS curve derives its having a slope because of the Marginal Efficiency of Investment curve, in which investment declines as interest rates rise. One thing which hasn't been mentioned, yet, is that savings might depend on interest rates, in which case so will consumption and, finally, the IS curve. Will the incorporation of the effect of interest rates on saving make the IS curve steeper or flatter? 5. The textbook has a long discussion about what happened to real income and interest rates in the US economy during three periods of contractionary monetary policy. a) First of all, show what the standard IS-LM analysis says should happen. b) If there is a vertical aggregate supply curve, how will that affect the standard analysis? Show on a graph. c) The book goes into the details of how the real interest rate changed in those three episodes. What is the real interest rate, why are we interested in it, and what should happen to it if there is a contractionary monetary policy?
lose credit if your name appears anywhere else. Answer on these sheets, using the backsides if necessary. Ask for clarification of any ambiguous question. Time: 1 hour. 1. (20 points) Identify the following with a sentence or at most two:
a) Nominal GNP targeting b) discouraged workers d) golden rule e) feedback policy
will real wages be pro-cyclical or countercyclical? Explain, illustrating with parallel graphs of aggregate supply and demand, and the labor market.
important? Give one reason why it may be overestimated, and one why it might be underestimated? b. (10 points) What is overshooting, and why might it be important? 4. Under what circumstances does monetary targeting stabilize the economy better than interest rate targeting? (15 points) 5. (15 points) Does an unaticipated change in aggregate demand cause stagflation? Explain, illustrating your answer with a graph. 6. (15 points) The textbook devoted most of Chapter 9 to a microeconomic based theory of unemployment, which departs from modeling separately job losers and job gainers. a) State and explain very briefly two factors which affect job losses? b) How do price expectations fit into this model? c) State and explain very briefly two advantages to this strategy of explaining unemployment, versus a Phillips curve approach which would be based on some version of rational or adaptive expectations.
lose credit if your name appears anywhere else. Answer on these sheets, using the backsides if necessary. Ask for clarification of any ambiguous question. Time: 1 hour. 1. (20 points) Identify the following with a sentence or at most two: a) Real exchange rate b) Ricardo Barro hypothesis (theorem) c) Tobin's q d) Transitory Income e) J curve 2. What is the life cycle hypothesis? Explain it, and then present two predictions derived from it, which are relevant for government policy.
disturbances caused from overseas? Explain, using a graph if necessary. b) Is this isolating effect, if true, beneficial or harmful? Explain.
velocity of money with changes in interest rates. Some emphasis is placed on differing ways of defining money. a) What is the theoretical prediction of how the velocity of money should vary with interest rates? b) Which definition of money is it whose velocity performs most closely to this prediction? c) Very briefly, what is the book's explanation of why the other definitions do not perform as well? 5a. Describe briefly what is meant by the investment accelerator. b. What practical policy implications does this model predict? c. How will the accelerator change if: a) The capital output ratio rises? b) Real world lags are taken into account c) The desired capital output ratio is sensitive to interest rate changes?
Econ 301 Final Exam Fall, 1995 Professor Twomey Please PRINT your name on the back of the last sheet. You will lose credit if it appears anywhere else. Questions are equally weighted. Ask for clarification if you are unsure of what is being asked. Time: whatever you need - about an hour. Good luck! 1). Identifications: a. SDR
b. voter myopia c. Ricardian equivalence d. accommodative monetary policy e. public choice view 2. Suppose that the Federal Reserve is using an interest rate as an intermediate target, while real income is the ultimate policy target, and there is an autonomous drop in business investment that the Fed had not predicted. use the IS-LM model to show the effects of the shock. Would income have been affected more or less if the Federal Reserve were using a money stock target? Explain.
interest rates? Explain. b. If the MPC is 0.8 and the marginal tax rate is 0.2, what is the value of the multiplier? If a new tax law raises the marginal tax rate to 0.3, what happens to aggregate demand? What happens to the multiplier? Explain briefly. 4.Suppose a country with a fixed exchange rate has a balance of payments surplus. What specific monetary and fiscal policies would eliminate that surplus? Explain briefly. b. What is the difference between internal and external balance, and why isn't the optimal level of income the same in both? 5. Now, suppose a country is on a flexible exchange rate system. What will happen to the equilibrium exchange rate (appreciate or depreciate) if that country engages in a tight monetary policy? Explain your answer with a graph of the market for foreign exchange, being careful to label the two axes.
what cases might this be desirable, and when not? Explain each answer. median was 49. High was 82 Yüklə 125,26 Kb. Dostları ilə paylaş:
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