Dr. Patrick Convery,
Econ 160 Money and Banking,
Department of Economics, UCLA
Winter, 2026
Midterm 1
January 29, 2026
First Name
Last Name
UCLA ID #
Do not start the exam until instructed to do so.
The 4 look-up tables are at the back of the exam.
, Multiple Choice
Select the correct letter. No partial credit.
Question 1 (10 points)
We discussed several concepts and statements about GDP in class. Which of the
following statements regarding GDP is FALSE:
A) We only count newly produced, final goods and services in GDP.
B) Investment spending which includes the purchase and sale of financial
assets, is not a component of GDP.
C) Environmental goods, such as clear air, are not included in GDP as we
currently measure it.
D) GDP as currently measured includes household production.
Answer: D
, Question 2 (10 points)
This question is about a zero-coupon bond with YTM = 4.00%. Assume the face
value and YTM are constant. Based on this information and assumptions, what
does this imply about the price of this bond as the bond moves closer to its
maturity date?
A) will fall
B) will rise
C) may rise and fall at different points in over, but ultimately will rise by the
time it reaches maturity.
D) does not change.
E) there is not enough information to answer this question.
Answer: B
We don’t need to know the price to answer this question. (From lecture 3, page 1: zero-coupon
bonds always sells at a discount (a price lower than face value).
With the assumption that face value and YTM are constant, then “B” must be true, because for a
zero-coupon bond, the PV is < face value for a given rate, thus the price must rise as the bond
moves closer to its maturity date because the price must equal the face value at maturity. Also,
the price does not fall as it moves toward maturity because we are told the YTM stays constant.
Econ 160 Money and Banking,
Department of Economics, UCLA
Winter, 2026
Midterm 1
January 29, 2026
First Name
Last Name
UCLA ID #
Do not start the exam until instructed to do so.
The 4 look-up tables are at the back of the exam.
, Multiple Choice
Select the correct letter. No partial credit.
Question 1 (10 points)
We discussed several concepts and statements about GDP in class. Which of the
following statements regarding GDP is FALSE:
A) We only count newly produced, final goods and services in GDP.
B) Investment spending which includes the purchase and sale of financial
assets, is not a component of GDP.
C) Environmental goods, such as clear air, are not included in GDP as we
currently measure it.
D) GDP as currently measured includes household production.
Answer: D
, Question 2 (10 points)
This question is about a zero-coupon bond with YTM = 4.00%. Assume the face
value and YTM are constant. Based on this information and assumptions, what
does this imply about the price of this bond as the bond moves closer to its
maturity date?
A) will fall
B) will rise
C) may rise and fall at different points in over, but ultimately will rise by the
time it reaches maturity.
D) does not change.
E) there is not enough information to answer this question.
Answer: B
We don’t need to know the price to answer this question. (From lecture 3, page 1: zero-coupon
bonds always sells at a discount (a price lower than face value).
With the assumption that face value and YTM are constant, then “B” must be true, because for a
zero-coupon bond, the PV is < face value for a given rate, thus the price must rise as the bond
moves closer to its maturity date because the price must equal the face value at maturity. Also,
the price does not fall as it moves toward maturity because we are told the YTM stays constant.
