02 Jun Question Economics 304L SAMPLE MIDTERM EXAM #2
Question
Economics 304L SAMPLE MIDTERM EXAM #2
Instructions: Answer the problems in the space provided. Show your work to receive credit! You may use a
calculator and a one-page formula sheet. This sample exam has more questions than your exam will have.
Multiple choice (2 points each)
1. Consider the effect of a rise in the real interest rate on the quantity of private saving. The sub stitution
effect of a rise in the real interest rate _____ private saving and _____ consumption.
a. increases; increases c. decreases; increases
b. increases; decreases d. decreases; decreases
1.’ Consider the effect of a rise in the real interest rate on the quantity of private saving. The income
effect _____ the private saving of “lending” households, and _____ the private saving of “borrowing”
households.
a. increases; increases c. decreases; increases
b. increases; decreases d. decreases; decreases
2. If disposable income falls temporarily, consumption _____ and private saving _____.
a. falls; falls c. rises; falls
b. fall; rises d. rises; rises
2′. If disposable income increases temporarily, consumption increases _____ t han if the increase in
disposable income were permanent, and private saving increases _____.
a. more; less c. less; more
b. more; more d. less; less
In the next four questions, assume Ricardian Equivalence holds. Also assume the economy is closed.
3. The government cuts current taxes (without changing government spending now, or government
spending planned for the future). As a result, national saving _____ and the real interest rate _____.
a. increases; falls c. does not change; does not change
b. decreases; rises d. decreases; falls
4. Government purchases increases temporarily, due to a war. To avoid increasing the government
budget deficit, taxes are increased by enough to cover the increase in government purchases. As a
result, national saving _____ and the real interest rate _____.
a. increases; falls c. does not change; does not change
b. decreases; rises d. decreases; falls
4.’ Government purchases increases temporarily, due to a war. The increase in government spending is
bond-financed (the government borrows in financial markets by selling government bonds). As a
result, national saving _____ and the real interest rate _____.
a. increases; falls c. does not change; does not change
b. decreases; rises d. decreases; falls
2
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.