Macro 3

Tom receives a check for 10000 from his uncle. If he puts 8000 in a savings account and spends the rest what is the marginal propensity to consume? a.1 b. 0.80 c.0.40 d. 0.20

0.20

A country has 40 billion of domestic investment and net capital outflow of -20 billion. what is the country savings. a. -60 b. -20 c. 20 d. 60

20

Suppose that before a recession a nation ecnonomy was groowing 3%. During the recession economic growth was -1.5 . the amplitude of this recession is ___ percantage points a. 3 b. 1.5 c. 2.5 d. 4.5

4.5

A country has a national saving of 80 billion, government expenditures of 40 billion, domestic investment of 50 billion, and net capital outflow of 30 billiom. what is supply of loanable funds? a. 30 b. 40 c.50 d. 80

80

all else constant, a smaller marginal propensity to consume causes a __ multiplier a. larger b. smaller c. the marginal propensity to consume does not influence the multiplier

?

Which of the following is a leakage from the multiplier process a. savings b. taxes c. imports d. A and B e. A B C

A B C

which of th following would decrease if South Korea imposes an import quota on automobiles. a. South Korean exports and S Korean imports b. S.K. exports, but not imports c. S.K. imports, but not exports d. neither

a. South Korean exports and S Korean imports

Suppose that chinese citizens purchase fewer assets in the United States. this should cause Chinese renminbi to ___ relative to the US dollar and China net export to a. appreciate, decrease b. appreciate, increase c. deppreciate, decrease d.deppreciate, increase

a. appreciate, decrease

Suppose a nations household begin to save more of their income. This expected to __ the interest rate in the market for loanable funds and cause the nations currency to ___. a. decrease, depreciate b.decrease, appreciate c.increase,appreciate d.increase, depreciate

a. decrease, depreciate

If a country removed an import quota on cotton, then overall that country a. exports and imports would rise b. exports rise, import would fall c. exports would fall and imports would rise d. exports + imports fall

a. exports and imports would rise

all else constant, a change in ___ is expected to have a lager impact than change in ___ on total demand for goodsand services a. government spending, taxes b. taxes, government spending c. changes are the same

a. government spending, taxes

Suppose that real interest rates in the US rise relative to real interest rates in other sountries. This increase would make foreigners a. more willing to purchase US bonds, so US net capital outflow would fall. b. more willing to purchase US bonds, so US net capital outflow would rise c. less willing to purchase US bonds, so US net capital outflow would fall d. less willing to purchase US bonds, so US net capital outflow would rise

a. more willing to purchase US bonds, so US net capital outflow would fall.

A country sells more goods and services to foreign countries than it buys from them. it has a a. trade surplus and positive net exports b. a trade surplus and negative net exports c. a trade deficit and positive net exports d. a trade deficit and negative net exports

a. trade surplus and positive net exports

When Jamie, a US citizen purchases a wool jacket made in Ireland, the purchase is a. both a US and Irish import b. a US import and Irish export c. a US export and Irish import d. neither an export nor an import for either country

b. a US import and Irish export

Economists have found that enrollment in university increases during recession and falls during expansions. in this case, student enrollment in university would be a. procyclical b. countercyclical c. acyclical d. leading

b. countercyclical

Keynesian economists tend to focus on ___ side issues a. supply b. demand c. import d. legislative

b. demand

A ___ gap occurs when output is above potential output a. deflationary b. inflationary c. time-series d. dichotomous

b. inflationary

Suppose if country Y firms typically lay of workers one month after recession begin. After the end of a recession, national employment does not increase for two month. Employment would be considered a ___ variable a. leading b. lagging c. acyclical d. countercyclical

b. lagging

most economists believe that the classical theory of the economy best describes a. short run b. long run c. both long and short run d. neither

b. long run

In the IS-LM model an increase in the money supply leads to a __ interest rate and ___ output. a. lower, lower b. lower, higher c. higher, higher d. higher, lower

b. lower, higher

Suppose a Big Mac is 3.15 in the Euro area and 5 in the US. the nominal exchange rate between the euro and dollar is 0.8 eu to 1 dollar. According to the economists big mac index, the euro __ and should ___ over time a. undervalued, depreciate b. overvalued, depreciate c.undervalued, appreciate d. overvalued, depreciate

b. overvalued, depreciate

During the last recession many governments attempted to balance their budgets. In practice, this typically involves a decrease in spending and an increase in taxes. In the IS-LM framework, what is the expected outcome of decreasing government spending and increasing taxes? a. Lower interest rates and higher output b.Lower interest rates and lower output c. Higher interest rates and higher output d. Higher interest rates and lower output *

b.Lower interest rates and lower output

Suppose that a 20 increase in government spending raises total demand for goods an services by 30. Assuming there is no crowding out, what is the marginal propensity to consume? a. 1.5 b. 0.67 c. 0.33 d. none

c. 0.33

In the last 20 years the use of opiod based narcotics has increased dramatically in US. Use rates have continued to increase during economic expansion and contractions. This suggest that the use of narcotics is a ___ variable a. procyclical b. countercyclical c. acyclical d. leading

c. acyclical

Suppose that in country X households buy more new cars when GDP increases and buy fewer when it contracts. The number of new cars purchased would be considered a ___ variable a. leading b. Lagging c. coincident d. acyclical

c. coincident

If the risk of buying US assets rises because it is discovered that lending institutions had not carefully evaluated borrowers prior to lending them funds, then a. the dollar will appreciate and the interest rate in the US will rise b. the dollar will appreciate and the interest rate in the US will decrease c. the dollar will deppreciate and the interest rate in the US will rise d.the dollar will deppreciate and the interest rate in the US will decrease

c. the dollar will deppreciate and the interest rate in the US will rise

A country purchases 3 billion of foreign-produced goods and services and ssells 2 billion dollars of domestically produced goods and services to foreign countries. it has a. exports of 3 billion and trade surplus of 1 b. exports of 3 billion and trade deficit of 1 billion c. exports of 2 billion and trade surplus d. exports of 2 billion and trade deficit of 1 billion

d. exports of 2 billion and trade deficit of 1 billion

Net capital outflow equals the purchase of a. foreign assets by domestic residents b. domestic assets by foreign residents c. domestic assets by foreign residents - the purchase of foreign assets by domestic residents d. foreign assets by domestic residents - the purchase of domestic assets by foreign residents

d. foreign assets by domestic residents - the purchase of domestic assets by foreign residents

Suppose taxes are lowered in an economy. at the same time the nation central bank buys bonds through open market operations. In the IS-LM framework, these changes are expected to ___ the economy interest rate and ___ its GDP a. Increase, increase b. decrease, increase c. increase, have uncertain impact on d. have uncertain impact on, increase

d. have uncertain impact on, increase

In the open economy macroeconomic model, if a country interest rate rises, then its a. net capital outflow and net export rise b. net capital outflow rises and its net exports fall c. net capital outflow falls and its net exports rise d. net capital outflow and net exports fall

d. net capital outflow and net exports fall

As compared to classical economists, Keynesian economists are more likely to believe that markets may adjust ___ to shocks and may be a. quickly, efficient b. quickly, inefficient c. slowly, efficient d. slowly, inefficient

d. slowly, inefficient

Suppose that more investors expected the US dollar will fall in value in the near future. this will cause the US dollar to ___ relative to the euro and US net exports to ___ a. appreciate, decrease b.appreciate, increase c. deppreciate, decrease d.deppreciate, increase

d.deppreciate, increase

Due to a period of inflation there is a decline in the supply of real money balances. According to the IS-LM framework, this is expectede to ___ the interest rate and ___ output. a. decrease, decrease b.decrease, increase c.increase,increase d.increase, decrease

d.increase, decrease