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ECON 100 Tutorial 24

ECON 100 Tutorial 24. Rob Pryce www.robpryce.co.uk/teaching. CLASS TEST!! Past Exam Questions. The hypothesis of the expectations-augmented Phillips curve holds that:. employment contracts fully accommodate the rate of price inflation job-seekers never make systematic errors

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ECON 100 Tutorial 24

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  1. ECON 100Tutorial 24

    Rob Pryce www.robpryce.co.uk/teaching
  2. CLASS TEST!! Past Exam Questions
  3. The hypothesis of the expectations-augmented Phillips curve holds that: employment contracts fully accommodate the rate of price inflation job-seekers never make systematic errors wage settlements are partially determined by the expected rate of price inflation reservation wages are determined by minimum wage legislation 2010 Exam Q32
  4. The hypothesis of rational expectations contends that individuals: do not make systematic errors anticipate future prices accurately adapt slowly to the rate of inflation only make rational errors 2010 Exam Q34
  5. Identify the missing word(s): Goodhart’s Law states ‘that any ________ will tend to collapse once pressure is placed upon it for control purposes.’ monetary target observed statistical regularity fiscal budgetary stance structured investment 2010 Exam Q35
  6. Suppose that national income (measured in 1990 prices) is £1000 billion. Suppose further that prices have doubled since 1990 and that the typical unit of money circulates around the economy 20 times per year. What is the money supply? £50 billion £100 billion £150 billion £200 billion 2010 Exam Q36
  7. If the LM curve is vertical, then: full crowding out occurs fiscal policy will be infinitely effective monetary policy will not work supply side policies will be unavailable 2010 Exam Q38
  8. With Keynes’s speculative/asset demand to hold money, speculation is in respect of a likely change in: (a) the inflation rate (b) the exchange rates (c) bond prices (d) equity prices 2012 Exam Q31
  9. According to Friedman’s re-interpretation of the Phillips Curve, if inflationary expectations rise, the Phillips curve: a) shifts down b) shifts up c) becomes flatter d) becomes steeper 2011 Exam Q32
  10. Fiscal monetarists argue that inflation is a consequence of excessive growth in: (a) revenue from taxation (b) national debt (c) the money supply (d) national output 2012 Exam Q37
  11. The Taylor Rule is a representation of monetary policy whereby the short-term nominal interest rate is varied systematically with respect to: (a) the trade deficit and the value of sterling (b) employment and the cost of living (c) inflation and the ‘output gap’ (d) tax revenues and the level of government borrowing 2012 Exam Q38
  12. When the Bank of England undertakes quantitative easing: (a) long-term government bonds (gilts) are bought using newly created money (b) the composition of the national debt is altered (c) the volume of the national debt remains constant (d) all of the above 2012 Exam Q40
  13. For UK international payments, the ‘balance for official financing’ is the value of: a) net exports including ‘invisibles’ b) foreign exchange reserves c) net UK borrowing from foreign central banks d) foreign exchange bought/sold to maintain the exchange value of sterling 2011 Exam Q38
  14. A nation with a fixed exchange rate cannot insulate itself from world inflation because, if initially its domestic inflation rate is lower than elsewhere: a) economic recession forces domestic prices up b) domestic goods become less competitive and cost-push inflation raises domestic prices c) domestic goods become more competitive which tends to increase money in domestic circulation d) none of the above 2011 Exam Q39
  15. Which of these is the money multiplier? (1 + CDR)/(RR + CDR) CDR / RR RR / CDR RR / (1 + CDR)
  16. If S=I, and G>T, then X = M X > M M > X We’re all doomed
  17. I will pay you £100 next year. Your discount rate is 5%. What would be a fair value for this “bond”? £100 £95.23 £97.42 £105
  18. If a bond has a redemption value of £100, pays a coupon of 3%, and matures in 2 years, what is its value to someone with a discount rate of 3%? £103 £97 £99 £100
  19. Who is Gerry’s all-time favourite economist? Paul Krugman John Maynard Keynes Friedrich Hayek
  20. Good luck! Don’t forget: Pen, Pencil, Rubber/Eraser Calculator Library Card Where you’re meant to be
  21. NEXT WEEK’S TUTORIAL We will go through the MCQ answers.
  22. Any Questions? Email: r.pryce@lancaster.ac.uk Web: www.robpryce.co.uk/teaching OfficeHour: Wednesday, 9:45 – 10:45 Charles Carter C Floor or by appointment (email me)
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