Econ final

4) When you arrive at the airport in Paris and go to the bank window to exchange dollars into euros, you are

) buying euros from the French.

5) Which of the following statements is TRUE?

A) The long-run aggregate supply curve is vertical.

43) If net exports is 100 and the private sector balance is 150, then the government sector balance is

B) -50

19) Suppose the exchange rate between the U.S. dollar and the Mexican peso was $1 = 5 pesos. A can of Pepsi sells for $2 in Boston and for 12 pesos in Mexico City.

C) Purchasing power parity does not prevail with these prices.

44) In the table above, what does the private sector surplus equal?

A) $150 billion

12) Suppose that a dollar buys 120 yen. If a VCR sells for 18,600 yen in Japan, the price of the VCR in dollars is ________.

A) $155.00

47) The table above gives some of the entries in the national income and product accounts. What is the value of exports?

A) $350 billion

4) In the above figure, which movement illustrates the impact of a rising price level and a constant money wage rate?

A) E to F

12) Suppose there is an increase in the short-run aggregate supply with no change in the long-run aggregate supply. This situation could be the result of

A) a decrease in the money wage rate.

40) Using the data in the above table, if exports = $1,150 billion and the private sector runs a surplus of $300 billion, the government sector will run

A) a deficit of $150 billion.

35) The Fed in the U.S.

A) allows a flexible exchange rate, though their actions can impact the exchange rate.

8) Which of the following shifts both the LAS and SAS curves?

A) an advance in technology

20) Which of the following increases aggregate demand and shifts the AD curve rightward?

A) an increase in the quantity of money and a resulting fall in the interest rate

29) The Fed ________ intervene in the foreign exchange market by supplying dollars and the Fed ________ intervene in the foreign exchange market by demanding dollars.

A) can; can

26) If the interest rate on Japanese yen assets falls while interest rates in the United States remain constant, the

A) demand for dollars will increase.

48) Suppose a British bank offers a 3 percent interest rate while a U.S. bank offers a 7 percent interest rate. People must expect the U.S. dollar will

A) depreciate 4 percent.

32) If the Fed sells U.S. dollars, the exchange rate

A) falls.

5) As the exchange rate ________, the ________ is the value of U.S. ________.

A) falls; greater; exports

22) Suppose the exchange rate falls from $1.20 Canadian per U.S. dollar to $1.10 Canadian per U.S. dollar. U.S. exports will ________, U.S. imports will ________, and U.S. aggregate demand will ________.

A) increase; decrease; increase

6) As the expected profit from holding dollars ________, the quantity of ________.

A) increases; dollars demanded increases

25) The aggregate demand curve shows the ________ relationship between the price level and ________.

A) negative; the quantity of real GDP demanded

7) We distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve. In the long run

A) real GDP equals potential GDP.

24) The aggregate demand curve shows that, if other factors are held constant, the higher the price level, the

A) smaller the quantity of real GDP demanded.

9) The higher the dollar's exchange rate, the ________ the expected profit from holding dollars and so ________ dollars are supplied.

A) smaller; more

31) If the People's Bank of China adopted a flexible exchange rate policy

A) the U.S. dollar would depreciate.

21) A change in ________ creates a movement along the aggregate demand curve, while a change in ________ shifts the aggregate demand curve.

A) the price level; government expenditures

42) The above table shows some of the balance of payments accounts for Urland. What is Urland's balance on the current account?

B) $84 billion

25) The U.S. interest rate minus the foreign interest rate is called the ________.

B) U.S. interest rate differential

19) Which of the following would NOT shift the U.S. aggregate demand curve?

B) a change in the quantity of capital in the United States

10) A decrease in the value of a currency in terms of other currencies is known as

B) a depreciation.

13) Suppose the peso-dollar foreign exchange rate changes from 50 pesos per dollar to 30 pesos per dollar. Then the peso has ________ against the dollar and the dollar has ________ against the peso.

B) appreciated; depreciated

36) Which of the following exchange rate policies uses a target exchange rate, but allows the target to change?

B) crawling peg

49) If the world real interest rate falls, then a country that is an international lender

B) decreases the amount of its lending.

1) The table above shows the exchange rates between various currencies and the U.S. dollar. Between 2015 and 2016, the Euro ________ against the U.S. dollar, the Japanese yen ________ against the U.S. dollar and the Canadian dollar ________ against the

B) depreciated, depreciated, depreciated

46) A small country is an international borrower and its domestic supply of loanable funds increases. Consequently, the equilibrium quantity of loanable funds used in the country __________ and the country's international borrowing _________.

B) does not change; decreases

3) When Safeway supermarkets in the United States buys strawberries from Mexico

B) it uses pesos to pay Mexican farmers.

50) A country's balance of payments accounts record

B) its international trading, borrowing, and lending.

1) Moving upward along the short-run aggregate supply curve results in a ________ in the price level and ________ in real GDP.

B) rise; an increase

15) According to the intertemporal substitution effect, when the price level increases, the interest rate

B) rises and the quantity of real GDP demanded decreases.

28) The aggregate demand curve

B) shifts rightward when taxes are decreased.

22) In the figure above, the shift in the demand curve for U.S. dollars from D0 to D1 could occur when

B) the U.S. interest rate rises.

38) The Federal Reserve can influence the exchange rate by

C) Both answers A and B are correct.

3) In the above figure, which point corresponds to an increase in technology?

C) Figure C

33) ________ can intervene directly in the foreign exchange market by buying or selling dollars.

C) The Fed

14) Suppose the exchange rate for the U.S. dollar falls. This could be caused by

C) a fall in the expected future exchange rate.

2) Suppose there is a temporary increase in the price of oil. This is represented by

C) a leftward shift of the SAS curve.

14) Which of the following shifts the short-run aggregate supply curve? I. changes in the size of the labor force II. changes in the money wage rate

C) both I and II

28) In the above figure, suppose the demand for dollars temporarily increases so that the demand curve shifts to D1. To maintain the target exchange rate, the Fed

C) can sell dollars.

39) If the Fed wants to depreciate the dollar against the yen, the Fed will

C) increase the supply of dollars by buying yen.

37) The People's Bank of China has (see Economics in Action on page 224 of the Parkin textbook)

C) managed its exchange rate to help control inflation.

30) If the Fed sets a target exchange rate that is higher than the current exchange rate, then

C) the Fed must buy dollars.

16) If the Federal Reserve increases interest rates, ceteris paribus

C) the supply curve of U.S. dollars shifts leftward and the supply curve of European euros shifts rightward.

11) Consider the market for dollars. If the exchange rate rises from 2 pesos per dollar to 4 pesos per dollar

C) there is an upward movement along the supply curve for dollars.

6) In the macroeconomic long run

D) All of the above are correct.

13) In the above figure, which part corresponds to a fall in the money wage rate?

D) Figure D

10) The short-run aggregate supply curve shifts when I. the full-employment quantity of capital changes. II. technology advances.

D) I and II

21) Suppose the exchange rate between the U.S. dollar and the Jamaican dollar was $1 U.S. = $40 Jamaican dollars. A beach towel sells for $20 in Miami and $60 Jamaican in Negril.

D) Purchasing power parity does not prevail with these prices.

24) Which of the following will lead to a depreciation of the dollar against the British pound?

D) a decrease in British demand for U.S. assets

11) Which of the following changes does NOT shift the long-run aggregate supply curve?

D) a fall in the price level

18) Which of the following increases aggregate demand?

D) an increase in the quantity of money

27) In the above figure, suppose the demand for dollars permanently decreases to D2. To maintain the target, the Fed

D) cannot permanently maintain the exchange rate target of 150 yen per dollar.

34) Suppose the target exchange rate set by the Fed is 150 yen per dollar. If the demand for dollars permanently decreases, then the Fed

D) cannot permanently maintain the target rate.

26) The AD curve shows the sum of

D) consumption expenditure, investment, government expenditures on goods and services, and net exports.

18) An increase in the Japanese interest rate will ________ the demand for dollars and lead the dollar to ________.

D) decrease; depreciate

2) If the exchange rate falls from 120 yen per dollar to 100 yen per dollar, the dollar has ________ and the yen has ________.

D) depreciated; appreciated

45) A small country is an international lender and its domestic supply of loanable funds increases. Consequently, the equilibrium quantity of loanable funds used in the country __________ and the country's international lending _________.

D) does not change; increases

7) If the United States sells beef to Japan, the U.S. beef producer is paid with

D) dollars.

16) The U.S. fiscal policy implemented in 2008 was an attempt to

D) give billions of dollars to businesses and low- and middle-income Americans in order to stimulate business investment and consumption expenditure, and thereby increasing AD.

15) The lower the exchange rate today, ceteris paribus, the

D) greater is the expected profit from buying U.S. dollars today and holding them.

41) A small country is an international borrower if its real interest rate without foreign borrowing is ________ the world real interest rate.

D) higher than

8) Other things remaining the same, the

D) larger the value of U.S. imports, the greater is the quantity of U.S. dollars supplied to the foreign exchange market.

23) In the above figure, the economy initially is at point B. Then price level rises by 10. The wealth effect will help

D) move the economy to point C.

17) In the above figure, if the economy is at point a, an increase in ________ will move the economy to ________.

D) real wealth from the fall in the price level; point c

23) Other things remaining the same, the U.S. interest rate differential increases if the U.S. interest rate

D) rises and foreign interest rates remain constant.

9) The curve labeled A in the above figure will shift rightward when

D) technology increases or the quantity of capital increases.

27) The U.S. aggregate demand curve shifts leftward if

D) the Federal Reserve increases the interest rate.

17) In the figure above, the shift in the supply curve for U.S. dollars from S0 to S1 could occur when

D) the U.S. interest rate differential increases.

20) The real exchange rate is

D) the relative price of U.S.-produced goods to foreign-produced goods.