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ECON 252 Exam 3 Questions with Correct Answers (Grade A+)

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ECON 252 Exam 3 Questions with Correct Answers (Grade A+)

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ECON 252 Exam 3 Questions with Correct Answers (Grade A+)

Question 1: 3 Functions of Money

Answer: Medium of exchange, sore of value, unit of account

Question 2: Quantity Theory of Money

Answer: Money supply & nominal GDP grow a the same rate in the long-run

Question 3: Inflation Equation

Answer: Inflation rate = growth rate M2 - growth rate real GDP

Question 4: How does a rising inflation rate affect interest rate?

Answer: Lowers the interest rate

Question 5: What is seigniorage?

Answer: Government revenue from printing currency

Question 6: How do you find real wage?

Answer: Nominal Wage / CPI

Question 7: Shifts in demand curve for federal funds market

Answer: 1. economic expansion/contraction
2. changing liquidity needs
3. changing deposit base (bank's balance)
4. changing reserve requirement
5. changing IR paid by Fed for having reserves

Question 8: Properties of economic fluctuations

Answer: 1. co-movement of macroeconomic variables
2. limited predictability of turning points
3. persistence in rate of economic growth




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