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There are 43 multiple choice questions. Your grade is determined entirely upon the answers listed on your scantron. Your scantron will not be returned so be ...
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Prof. Bill Even
Directions
To answer the next 4 questions, assume that the banking system starts with the following "base case" balance sheet and that (i) the public initially holds $1000 of non-bank cash; (ii) the reserve ratio is 5%; (iii) banks always loan out the maximum amount allowed.
BALANCE SHEET Reserves $2,000 Demand Deposits $40, Loans $30, Govt. bonds $23,000 Owner's Equity $15, $55,000 $55,
The diagram below plots the exchange rate in terms of number of Indian rupees per Chinese yuan since 2010.
Consider the diagram below to answer the next 3 questions:
LAS
AD
SAS
38 Suppose that the economy starts at a long run equilibrium and is producing at potential output. Now suppose that the U.S. increases government spending. Considering the likely effect of this on AD, we should expect that in the long run: a. prices rise and the unemployment rate settles at the natural rate. b. prices rise and the unemployment rate settles above the natural rate. c. prices fall and the unemployment rate settles above the natural rate. d. prices fall and the unemployment rate settles at the natural rate. e. none of the above.