Econ 545 Quiz 3 Answers

Mutasem Elayyoub

ECN545

Exam2

1.  In macroeconomics we look at a variety of measures of performance to get a sense of how things are going, and one of the more remarkable things you see is the massive hyperinflation in many countries of the former of the Soviet Union in the years after its dissolution. If you believe in the Quantity Theory of Money you would look where for the cause of the hyperinflation?

a. a table of GDP growth rates

b. a table of unemployment rates

c. a table of interest rates

d. a table of money supply figures

2. Which of the following statements about the labor force is true?

a. In the Great Recession the rise in the unemployment rate was high because of an increase in the labor force participation rate

b. The labor force participation rate in the US has increased substantially in the post WW II era

c. The post WW II rise in labor force participation rates of males accelerated in the Great Recession as men scrambled for jobs

d. In the 1st decade of the 21st century the increase in the labor force participation rates of women has increased sharply.

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3.  In the debate over the Obama fiscal stimulus the Republicans took the position that the growth of the government budget deficit would have a negative impact on the US economy, in part because of its impact on the capital market that is "captured" by the graph above. How would you show in this diagram the impact of an increase in the US budget deficit?

a. the I curve will shift outwards and this will drive up the interest rate

b. the I curve will shift inwards and this will drive down the interest rate

c. the S curve will shift inwards and this will drive up the interest rate

d. the S curve will shift inwards and this will drive down the interest rate

4. If I were interested in knowing how much output in the economy shrank in a recession, which of the following would be the best indicator?

a. real GDP

b. real GDP per capita

c. nominal GDP

d. CPI

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