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Principles of Economics Macroeconomics

by: Nola Williamson

Principles of Economics Macroeconomics ECON 2020

Marketplace > University of Virginia > Economcs > ECON 2020 > Principles of Economics Macroeconomics
Nola Williamson
GPA 3.91

Aaron Butz

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Aaron Butz
Class Notes
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This 6 page Class Notes was uploaded by Nola Williamson on Monday September 21, 2015. The Class Notes belongs to ECON 2020 at University of Virginia taught by Aaron Butz in Fall. Since its upload, it has received 51 views. For similar materials see /class/209770/econ-2020-university-of-virginia in Economcs at University of Virginia.


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Date Created: 09/21/15
ECON 2020 Fall 2011 Class Meeting Times MWF 1100am1150am Monroe 111 MWF 1200am1250am Monroe 116 Instructor Aaron Butz Email Arb7vvirginiaedu Office Monroe Hall Basement Office Hours Thursday 300500 Text Economics 8 h edition by David Colander Prerequisites No official prerequisite ECON 2010 can be helpful Midterm 20 Course Grade Final 40 Attendance 10 Homework and Quizzes 30 Exams The final exam will be December 16 h from 900am1200am for those in the 1100 section and December 8 h from 200pm500pm for those in the 1200 section The midterm will be given in class on October 5th Exams can only be made up under very special circumstances These are death in the family serious illness or university sponsored athletic events Homework and Quizzes There will be one quiz and four or five homeworks given throughout the semester You may work on homework in groups but everyone must submit an assignment which lists the group members they worked with Homeworks will typically be given through UVA Collab Please familiarize yourself with the site Attendance Attendance will be taken on six days during the semester Registration Last day to drop is 972011 lIf a US billionaire buys stock in a French rm then the purchase will be recorded in the A US current account B French current account C French capital account D US official transactions account 2Suppose a European stock costs 200 euros and the exchange rate is 125 dollars per euro The cost of this stock to American investor would be A 95 B 190 C 200 D 250 3A US citizen s purchase of stock in Hitachi a Japanese rm gives rise to a Japanese yen and a capital account in the US balance of payments A Demand for in ow B Supply of out ow C Demand for out ow D Supply of in ow 4Suppose the US Treasury nances the budget de cit by selling bonds to foreigners In the short run this transaction causes the US A Capital account balance to increase B Capital account balance to decrease C Current account balance to increase D Current account balance to decrease 5If an excess supply of a country39s currency exists then it implies that the country must have a A Balance of payments surplus B Balance of payments de cit C Current account surplus D Current account de cit 6 The demand for dollars in the foreign exchange market slopes because foreign consumers buy US goods when the foreign currency price of the dollar decreases A Upward fewer B Upward more C Downward fewer D Downward more 7 Ifboth US prices and Japanese income decline then the A Dollar will lose value in terms of yen B Dollar will gain value in terms of yen C Dollar39s value will not change in terms of yen D Change in the dollar s value cannot be determined without more information 8 In the late 1990s the euro fell in value from about 116 dollars per euro to about 102 dollars per euro This trend might be explained by A Slower economic growth in Europe B Higher interest rates in Europe C Higher in ation in Europe D Central bank sales of US Dollars Price of euros in dollars 0 Quantity of euros 9 Refer to the graph above A decrease in US income would shift A 1 in and cause the euro to gain value B Sl out and cause the euro to lose value C D1 out and cause the euro to gain value D D1 in and cause the euro to lose value 10 Refer to the graph above A decrease in the income of the European Union would shift A D1 out causing an appreciation of the euro B D1 in causing a depreciation of the euro C Sl in causing an appreciation of the euro D Sl out causing a depreciation of the euro 11 Refer to the graph above A decrease in the US price level would shift A D1 out and S1 in causing an appreciation of the euro B D1 in and S1 out causing a depreciation of the euro C D1 out and S1 out causing a depreciation of the euro D D1 in and S1 in causing an appreciation of the euro 12 Refer to the graph above A decrease in American interest rates would shift A DI out and S1 in causing an appreciation of the euro B D1 out and S1 out causing a depreciation of the euro C D1 in and S1 in causing an appreciation of the euro D D1 in and S1 out causing a depreciation of the euro 13 If interest rates in the United States rise relative to interest rates in foreign nations US capital in ows will and US capital out ows will causing the demand for dollars to and the supply of dollars to A Increase decrease rise fall B Decrease increase fall rise C Decrease decrease rise rise D Increase decrease fall rise 14 An increase in the money supply tends to A Reduce both interest rates and capital in ows B Reduce interest rates and increase capital in ows C Increase interest rates and reduce capital in ows D Increase both interest rates and capital in ows 15 Contractionary monetary policy generally A Depresses the exchange rate of a country39s currency B Has no effect upon the exchange rate of a country39s currency C Increases the exchange rate of a country39s currency D Affects only the exchange rate of a country39s exports and imports 16 Considering primary effects through the price level interest rates and income only the exchange rate effects of changes in government spending andor taxes are A Ambiguous because the price and income effects go against the interest rate effect B Ambiguous because the price and interest rate effects go against the income effect C Clear because the price and interest rate effects dominate the income effect D Clear because the price and income effects dominate the interest rate e ect 16 A country will lose official reserves if it A Sells its own currency B Sets an exchange rate for its currency that is above the market rate C Sets an exchange rate for its currency that is below the market rate D Buys foreign currency Cost in domestic currency of producing Wine and an electric generator 1quot rancc Germ any francs marks Wine 10 20 Electric Generator 10000 30000 17 The opportunity cost of an electric generator in France is A 0001 bottles of wine B 000067 bottles ofwine C 1000 bottles ofwine D 1500 bottles ofwine 18 The opportunity cost of an electric generator in Germany is A 0001 bottles of wine B 000067 bottles ofwine C 1000 bottles ofwine D 1500 bottles ofwine 19 The US has comparative advantages in all the following factors except A A highly trained population in other languages besides English B Welldeveloped institutions C Arelatively exible immigration policy that invites bright foreigners to participate in the US labor force D Numerous natural resources 20 An import quota A Decreases the price of the imported good to the consumer B Increases the price of the domestic good to the consumer C Redistributes income from the domestic producer to the protected domestic exporter D Decreases the price received by the foreign producer 21 When rms are able to supply a larger market at a lower unit cost production is said to exhibit A Economies of scale B Diseconomies of scope C Learning by doing D Economies of performance 22 Both the quotlearning by doingquot argument and the existence of economies of scale are used to make the A Infant industry argument for protection B National security argument for protection C Ef ciency argument for free trade D Equity argument for free trade 23 If actual income is 200 billion potential income is 250 billion and the total de cit is 10 billion then the structural de cit can be any of the following except A Zero B 6 billion C 8 billion D 10 billion 24 Suppose potential income is 60 billion actual income is 40 billion and expenditures don t vary with income If the actual budget de cit is 6 billion and the marginal taX rate is 30 percent the structural de cit A Is zero B Is between zero and 4 billion C Is 4 billion D Cannot be determined from the given information 25 Economists are concerned about A More structural de cits than passive de cits B Equally structural and passive de cits C More passive de cits than structural de cits D Not about structural or passive de cits 26 The real de cit and the nominal de cit A Differ only when there is no in ation B Differ only when there is no national debt C DilTer only when there is in ation and a country has a national debt D Are essentially the same 27 Ifthe real de cit is 400 billion the in ation rate is 5 percent and the debt is 3 trillion then the nominal de cit is A 100 billion B 250 billion C 400 billion


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