MACRO FINAL!!!
Any item that people can use to transfer purchasing power from the present to the future is called a. a medium of exchange. b. a unit of account. c. a store of value. d. None of the above is correct
c. a store of value.
If a country has a trade surplus then a. S > I and Y > C + I + G. b. S > I and Y < C + I + G. c. S < I and Y > C + I + G. d. S < I and Y < C + I + G.
a. S > I and Y > C + I + G.
According to the classical dichotomy, which of the following is influenced by monetary factors? a. nominal wages b. unemployment c. real GDP d. All of the above are correct.
a. nominal wages
If the government of a country with a zero trade balances increases its budget deficit, then interest rates a. rise and the trade balance moves to a surplus. b. rise and the trade balance moves to a deficit. c. fall and the trade balance moves to a surplus. d. fall and the trade balance moves to a deficit.
b. rise and the trade balance moves to a deficit.
If the U.S. imposed import quotas on cotton, then which of the following would rise? a. the U.S. real exchange rate and U.S. net exports b. the U.S. real exchange rate but not U.S. net exports c. U.S. net exports but not the U.S. real exchange rate d. neither the U.S. real exchange rate nor U.S. net exports
b. the U.S. real exchange rate but not U.S. net exports
Which of the following events could explain a shift of the money-supply curve from MS1 to MS2? a. an increase in the value of money b. a decrease in the price level c. an open-market purchase of bonds by the Federal Reserve d. the Federal Reserve sells bonds.
c. an open-market purchase of bonds by the Federal Reserve
If at a given real interest rate desired national saving is $140 billion, domestic investment is $90 billion, and net capital outflow is $60 billion, then at that real interest rate in the loanable funds market there is a a. surplus. The real interest rate will rise. b. surplus. The real interest rate will fall. c. shortage. The real interest rate will rise. d. shortage. The real interest rate will fall.
c. shortage. The real interest rate will rise.
Credit card limits are included in a. M1 but not M2. b. M2 but not M1. c. M1 and M2. d. neither M1 nor M2.
d. neither M1 nor M2.
Christopher is an unpaid, stay-at-home father who works as a volunteer at the local Habitat for Humanity chapter. Currently, Christopher is not looking for a paid job. The Bureau of Labor Statistics counts Christopher as a. unemployed and in the labor force. b. unemployed but not in the labor force. c. in the labor force but not unemployed. d. neither in the labor force nor unemployed
d. neither in the labor force nor unemployed
If the local government imposed a minimum wage of $6 in Productionville, how many people would be unemployed?
0
If the government imposes a minimum wage of $4, then employment will decrease by a. 0 workers. b. 2,000 workers. c. 3,000 workers. d. 4,000 workers.
0 workers
An economy starts with $50,000 in currency. All of this currency is deposited into a single bank, and the bank then makes loans totaling $45,750. The T-account of the bank is shown below. If all banks in the economy have the same reserve ratio as this bank, then the value of the economy's money multiplier is a. 9.33. b. 1.09. c. 10.76. d. 11.76.
11.76 50000-45750 =4250 4250/50000 = .085 1/.085 = 11.76
The idea that inflation by itself reduces people's purchasing power is called a. the inflation tax. b. menu costs. c. the inflation fallacy. d. shoeleather costs.
The inflation fallacy
Suppose the Fed requires banks to hold 9 percent of their deposits as reserves. A bank has $18,000 of excess reserves and then sells the Fed a Treasury bill for $9,000. How much does this bank now have to lend out if it decides to hold only required reserves? a. $27,000 b. $27,190 c. $26,190 d. $9,000
a. $27,000
In June 2009 the Bureau of Labor Statistics reported an adult population of 234.9 million, unemployment of 12.4 million, and employment of 141.6 million. Based on these numbers the labor-force participation rate was a. 154/234.9. b. 141.6/234.9. c. 141.6/154. d. None of the above is correct.
a. 154/234.9.
According to purchasing-power parity, if a basket of goods costs $100 in the U.S. and the same basket costs 800 pesos in Argentina, then what is the nominal exchange rate? a. 8 pesos per dollar b. 1 peso per dollar c. 1/8 peso per dollar d. none of the above is correct
a. 8 pesos per dollar
Which of the following is correct? a. A bank's deposits at the Federal Reserve counts as part of the bank's reserves. The Federal Reserve pays interest on these deposits. b. A bank's deposits at the Federal Reserve counts as part of the bank's reserves. The Federal Reserve does not pay interest on these deposits. c. A bank's deposits at the Federal Reserve does not count as part of the bank's reserves. The Federal Reserve pays interest on these deposits. d. A bank's deposits at the Federal Reserve does not count as part of the bank's reserves. The Federal Reserve does not pay interest on these deposits.
a. A bank's deposits at the Federal Reserve counts as part of the bank's reserves. The Federal Reserve pays interest on these deposits.
The banking system currently has $10 billion of reserves, none of which are excess. People hold only deposits and no currency, and the reserve requirement is 10 percent. If the Fed raises the reserve requirement to 12.5 percent and at the same time buys $1 billion worth of bonds, then by how much does the money supply change? a. It falls by $12 billion. b. It falls by $19 billion. c. It falls by $21 billion. d. None of the above is correct.
a. It falls by $12 billion. 10/.10 = 100 10/.125 = 80 100-80 = 20 1/.125 = 8 20 - 8 = 12
Who of the following would be included in the Bureau of Labor Statistics' "unemployed" category? a. Miguel, who is on temporary layoff b. Reta, who worked only 15 hours last week c. Marisa, who neither has a job nor is looking for one d. None of the above is correct.
a. Miguel, who is on temporary layoff
The nominal exchange rate is 4 Saudi Arabian riyals, 8 Moroccan dirham, 60 Indian rupees, or .8 euros per U.S. dollar. A fast food breakfast costs $5 in the U.S., 30 riyals in Saudi Arabia, 40 Moroccan dirham in Morocco, 250 Indian rupees in India, and 5 euros in France. According to these numbers, where is the real exchange rate between American and foreign goods the lowest? a. Saudi Arabia b. Morocco c. India d. Britain
a. Saudi Arabia
In the open-economy macroeconomic model, other things the same, which of the following both make the exchange rate fall? a. U.S. investment demand falls and foreign demand for U.S. goods falls b. U.S. investment demand falls and foreign demand for U.S. goods rises c. U.S. investment demand rises and foreign demand for U.S. goods falls d. U.S. investment demand rises and foreign demand for U.S. goods rises
a. U.S. investment demand falls and foreign demand for U.S. goods falls
Paying efficiency wages means that wages are a. above equilibrium, and profits are higher than otherwise. b. above equilibrium, and profits are lower than otherwise. c. below equilibrium, and profits are higher than otherwise. d. below equilibrium, and profits are lower than otherwise.
a. above equilibrium, and profits are higher than otherwise.
In a system of 100-percent-reserve banking, a. banks do not make loans. b. currency is the only form of money. c. deposits are banks' only assets. d. All of the above are correct. a. banks do not make loans.
a. banks do not make loans.
When a union bargains successfully with employers, in that industry, a. both wages and unemployment increase. b. wages increase and unemployment decreases. c. wages decrease and unemployment increases. d. both wages and unemployment decrease.
a. both wages and unemployment increase.
When inflation causes relative-price variability, a. consumer decisions are distorted and the ability of markets to efficiently allocate factors of production is impaired. b. consumer decisions are distorted, but markets are still able to efficiently allocate factors of production. c. consumer decisions are not distorted, but the ability of markets to efficiently allocate factors of production is impaired. d. consumer decisions are not distorted and markets are still able to efficiently allocate factors of production.
a. consumer decisions are distorted and the ability of markets to efficiently allocate factors of production is impaired.
In an open economy, national saving equals a. domestic investment plus net capital outflow. b. domestic investment minus net capital outflow. c. domestic investment. d. net capital outflow.
a. domestic investment plus net capital outflow.
As the price level decreases, the value of money a. increases, so people must hold less money to purchase goods and services. b. increases, so people must hold more money to purchase goods and services. c. decreases, so people must hold more money to purchase goods and services. d. decreases, so people must hold less money to purchase goods and services.
a. increases, so people must hold less money to purchase goods and services.
In which of the following cases is the after-tax real interest rate highest? a. inflation is 6%, the pre-tax real interest rate is 3%, and the tax rate is 20%. b. inflation is 6%, the pre-tax real interest rate is 3%, and the tax rate is 25%. c. inflation is 4%, the pre-tax real interest rate is 2%, and the tax rate is 20%. d. inflation is 4%, the pre-tax real interest rate is 2%, and the tax rate is 25%.
a. inflation is 6%, the pre-tax real interest rate is 3%, and the tax rate is 20%.
Norma receives an increase in her nominal income. She complains that the current inflation rate of six percent erodes the real purchasing power of her additional nominal income. This is true a. only if the increase in her nominal income is less than six percent. b. only if the increase in her nominal income is more than six percent. c. since inflation always reduces purchasing power. d. only if her real income increases.
a. only if the increase in her nominal income is less than six percent.
An increase in the budget deficit a. reduces investment because the interest rate rises. b. reduces investment because the interest rate falls. c. raises investment because the interest rate rises. d. raises investment because the interest rate falls.
a. reduces investment because the interest rate rises.
Evidence indicates that the typical person who becomes unemployed will a. soon find a job. b. find a job but not before a year or more has gone by. c. leave the labor force and never return. d. retire soon after
a. soon find a job.
Mia puts money into a piggy bank so she can spend it later. What function of money does this illustrate? a. store of value b. medium of exchange c. unit of account d. None of the above is correct
a. store of value
According to the classical dichotomy, which of the following is not influenced by monetary factors? a. unemployment b. the price level c. nominal interest rates d. All of the above are correct.
a. unemployment
Based on the quantity equation, if Y = 3,000, P = 3, and V = 4, then M = a. $4,000. b. $2,250. c. $250. d. $36,000.
b. $2,250.
A bank's reserve ratio is 8 percent and the bank has $1,000 in deposits. Its reserves amount to a. $8. b. $80. c. $92. d. $920.
b. $80.
An open economy has GDP of $1,200 billion, consumption expenditures of $900 billion government expenditures of $400 billion, domestic investment of $100 billion, and net exports of -$200 billion. What is its demand for loanable funds? a. -$200 billion b. -$100 billion c. $100 billion d. $200 billion
b. -$100 billion
In the special case of the 100 percent-reserve banking, the money multiplier is a. 1 and banks create money. b. 1 and banks do not create money. c. 2 and banks create money d. 2 and banks do not create money.
b. 1 and banks do not create money.
Suppose that some country had an adult population of about 25 million, a labor-force participation rate of 60 percent, and an unemployment rate of 6 percent. How many people were employed? a. 0.9 million b. 14.1 million c. 15 million d. 23.5 million
b. 14.1 million
Suppose that some country had an adult population of about 46 million, a labor-force participation rate of 75 percent, and an unemployment rate of 8 percent. How many people were employed? a. 2.76 million b. 31.74 million c. 34.5 million d. 42.32 million
b. 31.74 million
Suppose the relevant money-supply curve is the one labeled MS1; also suppose the economy's real GDP is 30,000 for the year. If the money market is in equilibrium, then the velocity of money is approximately a. 3.0 b. 6.0 c. 9.0 d. 1.5
b. 6.0
The adult population in the town of Shelbyville is 150 thousand. If 100 thousand people are employed and 20 thousand are unemployed, then the labor force participation rate is approximately a. 67%. b. 80%. c. 16%. d. 13%.
b. 80%
If the real exchange rate is 5/4 pounds of Chilean beef per pound of U.S. beef, a pound of U.S. beef costs $2 and the nominal exchange rate is 500 Chilean pesos per dollar, then Chilean beef costs a. 1,250 pesos per pound. b. 800 pesos per pound c. 250 pesos per pound. d. None of the above is correct.
b. 800 pesos per pound
Which of the following is an example of U.S. foreign direct investment? a. A U.S. based mutual fund buys stock in Eastern European companies. b. A U.S. citizen builds and operates a coffee shop in the Netherlands. c. A Swiss bank buys a U.S. government bond. d. A German tractor factory opens a plant in Waterloo, Iowa.
b. A U.S. citizen builds and operates a coffee shop in the Netherlands.
A bank has a 20 percent reserve requirement, $8,000 in loans, and has loaned out all it can given the reserve requirement. a. It has $6,400 in deposits. b. It has $10,000 in deposits. c. It has $9,600 in deposits. d. It has $1,600 in deposits.
b. It has $10,000 in deposits.
Which of the following contains a list only of things that increase when the budget deficit of the U.S. increases? a. U.S. supply of loanable funds, U.S. interest rates, U.S. domestic investment b. U.S. imports, U.S. interest rates, the real exchange rate of the dollar c. U.S. interest rates, the real exchange rate of the dollar, U.S. domestic investment d. the real exchange rate of the dollar, U.S. net capital outflow, U.S. net exports
b. U.S. imports, U.S. interest rates, the real exchange rate of the dollar
Paul, a Canadian citizen, purchases oranges grown in Florida. This purchase is an example of a. a U.S. import and a Canadian export b. a U.S. export and a Canadian import c. an export for both the U.S. and Canada d. an import for both Canada and the U.S.
b. a U.S. export and a Canadian import
The law of one price states that a. a good must sell at the price fixed by law. b. a good must sell at the same price at all locations. c. a good cannot sell for a price greater than the legal price ceiling. d. nominal exchange rates will not vary.
b. a good must sell at the same price at all locations.
Suppose that some people are counted as unemployed when, to maintain unemployment compensation, they search for work only at places where they are unlikely to be hired. If these individuals were counted as out of the labor force instead of as unemployed, then a. both the unemployment rate and labor-force participation rate would be higher. b. both the unemployment rate and labor-force participation rate would be lower. c. the unemployment rate would be lower, and the labor-force participation rate would be higher. d. the unemployment rate would be higher, and the labor-force participation rate would be lower.
b. both the unemployment rate and labor-force participation rate would be lower.
If the federal funds rate were above the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by a. buying bonds. This buying would reduce reserves. b. buying bonds. This buying would increase reserves. c. selling bonds. This selling would reduce reserves. d. selling bonds. This selling would increase reserves.
b. buying bonds. This buying would increase reserves.
If the U.S. real exchange rate appreciates, U.S. exports a. increase and U.S. imports decrease. b. decrease and U.S. imports increase. c. and U.S. imports both increase. d. and U.S. imports both decrease.
b. decrease and U.S. imports increase.
For a given real interest rate, an increase in inflation makes the after-tax real interest rate a. decrease, which encourages savings. b. decrease, which discourages savings. c. increase, which encourages savings. d. increase, which discourages savings.
b. decrease, which discourages savings.
If purchasing-power parity holds but then U.S. prices rise, which of the following move the exchange rate back towards purchasing-power parity? a. foreign prices rise or the U.S. nominal exchange rate rises b. foreign prices rise or the U.S. nominal exchange rate falls c. foreign prices fall or the U.S. nominal exchange rate rises d. foreign prices fall or the U.S. nominal exchange rate falls
b. foreign prices rise or the U.S. nominal exchange rate falls
Suppose that because of the popularity of the low-carb diet, bakeries need fewer workers and steak houses need more workers. The unemployment created by this change is a. frictional unemployment created by efficiency wages. b. frictional unemployment created by sectoral shifts. c. structural unemployment created by efficiency wages. d. structural unemployment created by sectoral shifts.
b. frictional unemployment created by sectoral shifts.
Suppose the demand for hard-wood flooring increases, while the demand for wall-to-wall carpeting decreases. Based on this change in consumer tastes, the demand for hard-wood-flooring factory workers in North Carolina increases, while the demand for carpet factory workers in Georgia decreases. This is an example of
b. frictional unemployment created by sectoral shifts.
Open-market purchases by the Fed make the money supply a. increase, which makes the value of money increase. b. increase, which makes the value of money decrease. c. decrease, which makes the value of money decrease. d. decrease, which makes the value of money increase.
b. increase, which makes the value of money decrease.
The unemployment rate of Aridia a. increased both from 2010 to 2011 and from 2011 to 2012. b. increased from 2010 to 2011 but decreased from 2011 to 2012. c. decreased from 2010 to 2011 but increased from 2011 to 2012. d. decreased both from 2010 to 2011 and from 2011 to 2012.
b. increased from 2010 to 2011 but decreased from 2011 to 2012.
When there is inflation, the number of dollars needed to buy a representative basket of goods a. increases, and so the value of money rises. b. increases, and so the value of money falls. c. decreases, and so the value of money rises. d. decreases, and so the value of money falls
b. increases, and so the value of money falls.
The theory of efficiency wages explains why a. setting wages at the equilibrium level may increase unemployment. b. it may be in the best interest of firms to offer wages that are above the equilibrium level. c. the most efficient way to pay workers is to pay them according to their skills. d. it is efficient for firms to set wages at the equilibrium level.
b. it may be in the best interest of firms to offer wages that are above the equilibrium level.
When inflation rises, people will desire to hold a. less money and will go to the bank less frequently. b. less money and will go to the bank more frequently. c. more money and will go to the bank less frequently. d. more money and will go to the bank more frequently.
b. less money and will go to the bank more frequently.
When a minimum-wage law forces the wage to remain above the equilibrium level, it a. raises both the quantity of labor supplied and the quantity of labor demanded compared to the equilibrium level. b. raises the quantity of labor supplied and reduces the quantity of labor demanded compared to the equilibrium level. c. reduces the quantity of labor supplied and raises the quantity of labor demanded compared to the equilibrium level. d. reduces both the quantity of labor supplied and the quantity of labor demanded compared to the equilibrium level.
b. raises the quantity of labor supplied and reduces the quantity of labor demanded compared to the equilibrium level.
The Fisher effect a. says the government can generate revenue by printing money. b. says there is a one for one adjustment of the nominal interest rate to the inflation rate. c. explains how higher money supply growth leads to higher inflation. d. explains how prices adjust to obtain equilibrium in the money market.
b. says there is a one for one adjustment of the nominal interest rate to the inflation rate.
People who are unemployed because wages are, for some reason, set above the level that brings labor supply and demand into equilibrium are best classified as a. cyclically unemployed. b. structurally unemployed. c. frictionally unemployed. d. discouraged workers.
b. structurally unemployed.
If a bank posts a nominal interest rate of 4 percent, and inflation is expected to be 3 percent, then a. the expected real interest rate is 7 percent. b. the expected real interest rate is 1 percent. c. the expected real interest rate is 1.33 percent. d. the expected real interest rate is 12 percent.
b. the expected real interest rate is 1 percent.
When the Fed buys government bonds, a. the money supply increases and the federal funds rate increases. b. the money supply increases and the federal funds rate decreases. c. the money supply decreases and the federal funds rate increases. d. the money supply decreases and the federal funds rate decreases.
b. the money supply increases and the federal funds rate decreases.
When the Consumer Price Index falls from 110 to 100 a. there is inflation of 9.1% and the value of money decreases. b. there is deflation of 9.1% and the value of money increases. c. there is deflation of 10% and the value of money increases. d. there is inflation of 10% and the value of money decreases.
b. there is deflation of 9.1% and the value of money increases.
A country has national saving of $100 billion, government expenditures of $30 billion, domestic investment of $80 billion, and net capital outflow of $20 billion. What is its demand for loanable funds? a. $60 billion b. $70 billion c. $100 billion d. $120 billion
c. $100 billion
A country has national saving of $50 billion, government expenditures of $30 billion, domestic investment of $10 billion, and net capital outflow of $40 billion. What is its supply of loanable funds? a. $20 billion b. $30 billion c. $50 billion d. $60 billion
c. $50 billion
Which of the following is not included in M1? a. a $5 bill in your wallet b. $100 in your checking account c. $500 in your savings account d. All of the above are included in M1
c. $500 in your savings account .
If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 15 percent receives a deposit of $600, it has a a. $600 increase in excess reserves and no increase in required reserves. b. $600 increase in required reserves and no increase in excess reserves. c. $510 increase in excess reserves and a $90 increase in required reserves. d. $90 increase in excess reserves and a $510 increase in required reserves.
c. $510 increase in excess reserves and a $90 increase in required reserves.
In an open economy, gross domestic product equals $1,970 billion, government expenditure equals $300 billion, investment equals $500 billion, and net capital outflow equals $280 billion. What is consumption expenditure? a. $280 billion b. $780 billion c. $890 billion d. $1,170 billion
c. $890 billion
If real output in an economy is 1,000 goods per year, the money supply is $300, and each dollar is spent an average of 4 times per year, then according to the quantity equation, the average price level is a. 3.33. b. 0.83. c. 1.20. d. 13.33.
c. 1.20.
According to purchasing-power parity, if the same basket of goods costs $100 in the U.S. and 50 pounds in Britain, then what is the nominal exchange rate? a. 2 pounds per dollar b. 1 pound per dollar c. 1/2 pound per dollar d. None of the above is correct
c. 1/2 pound per dollar
Based on the quantity equation, if M = 150, V = 4, and Y = 300, then P = a. 8. b. 0.5. c. 2. d. 3.
c. 2.
You put money into an account that earns a 5 percent nominal interest rate. The inflation rate is 2 percent, and your marginal tax rate is 20 percent. What is your after-tax real rate of interest? a. 3.6 percent. b. 2.4 percent. c. 2.0 percent. d. 4.4 percent.
c. 2.0 percent.
You put money into an account and earn a real interest rate of 5 percent. Inflation is 2 percent, and your marginal tax rate is 35 percent. What is your after-tax real rate of interest? a. 5.25 percent b. 3.05 percent c. 2.55 percent d. 1.25 percent
c. 2.55 percent 1-.35 = .65 .65 x 7 (5+2) nominal x .65 -4.55 minus 2 = 2.55
A bank has $8,000 in deposits and $6,000 in loans. It has loaned out all it can given the reserve requirement. It follows that the reserve requirement is a. 2.5 percent. b. 33.3 percent. c. 25 percent. d. 75 percent.
c. 25 percent.
In the open-economy macroeconomic model, the demand for dollars shifts right if at any given exchange rate a. foreign residents want to buy more U.S. goods and services. b. U.S. residents want to buy fewer foreign goods and services. c. Both A and B are correct. d. None of the above is correct.
c. Both A and B are correct.
John is a stockbroker. He has had several job offers, but he has turned them down because he thinks he can find a firm that better matches his tastes and skills. Curtis has looked for work as an accountant for some time. While the demand for accountants does not appear to be falling, there seems to be more people applying than jobs available. a. John and Curtis are both frictionally unemployed. b. John and Curtis are both structurally unemployed. c. John is frictionally unemployed, and Curtis is structurally unemployed. d. John is structurally unemployed, and Curtis is frictionally unemployed.
c. John is frictionally unemployed, and Curtis is structurally unemployed.
Which of the following is not correct? a. Frictional unemployment results from the process of matching workers and jobs. b. Structural unemployment results when the number of jobs is insufficient for the number of workers. c. Minimum wages are the predominant reason for unemployment in the U.S. economy. d. When a minimum-wage law forces the wage to remain above the level that balances supply and demand, it raises the quantity of labor supplied and reduces the quantity of labor demanded compared to the equilibrium level.
c. Minimum wages are the predominant reason for unemployment in the U.S. economy.
Which of the following best illustrates the concept of a store of value? a. You are a precious-metals dealer, and you are always aware of how many ounces of platinum trade for an ounce of gold. b. You sell items on eBay, and your prices are stated in terms of dollars. c. You keep 6 ounces of gold in your safe-deposit box at the bank for emergencies. d. None of the above is correct.
c. You keep 6 ounces of gold in your safe-deposit box at the bank for emergencies.
Which of the following includes everyone in the adult population that the Bureau of Labor Statistics counts as "unemployed"? a. anyone who is not employed b. anyone who is not employed, is available for work, and has looked for work in the past four weeks c. anyone who is not employed, is available for work, has looked for work in the past four weeks, and anyone who is waiting to be recalled from a job from which they have been laid off d. anyone who is not employed, is available for work, has looked for work in the past four weeks, anyone who is waiting to be recalled from a job from which they have been laid off, and anyone who is employed part time and has searched for full time employment in the past 4 weeks
c. anyone who is not employed, is available for work, has looked for work in the past four weeks, and anyone who is waiting to be recalled from a job from which they have been laid off
Suppose there are a large number of men who used to work or seek work who now no longer do either. Other things the same, this makes a. the number of people unemployed rise but does not change the labor force. b. the number of people unemployed rise but makes the labor force fall. c. both the number of people unemployed and the labor force fall. d. the number of people unemployed fall but does not change the labor force.
c. both the number of people unemployed and the labor force fall.
The primary difference between commodity money and fiat money is that a. commodity money is a medium of exchange but fiat money is not. b. fiat money is a medium of exchange but commodity money is not. c. commodity money has intrinsic value but fiat money does not. d. fiat money has intrinsic value but commodity money does not.
c. commodity money has intrinsic value but fiat money does not.
At the original exchange rate an import quota a. creates a surplus in the market for foreign-currency exchange, so the exchange rate rises. b. creates a surplus in the market for foreign-currency exchange, so the exchange rate falls. c. creates a shortage in the market for foreign-currency exchange, so the exchange rate rises. d. creates a shortage in the market for foreign-currency exchange, so the exchange rate falls
c. creates a shortage in the market for foreign-currency exchange, so the exchange rate rises.
Suppose that India has a government budget surplus, and then goes into deficit. This change would a. increase India's national saving and shift its supply of loanable funds left. b. increase India's national saving and shift its demand for loanable funds right. c. decrease India's national saving and shift its supply of loanable funds left. d. decrease India's national saving and shift its demand for loanable funds right
c. decrease India's national saving and shift its supply of loanable funds left.
Suppose the U.S. removes an import quota on steel. U.S. exports a. increase, the real exchange rate of the U.S. dollar appreciates, and U.S. net capital outflow increases. b. increase, the real exchange rate of the U.S. dollar depreciates, and U.S. net capital outflow is unchanged. c. decrease, the real exchange rate of the U.S. dollar appreciates, and U.S. net capital outflow is unchanged. d. decrease, the real exchange rate of the U.S. dollar depreciates, and U.S. net capital outflow decreases.
c. decrease, the real exchange rate of the U.S. dollar appreciates, and U.S. net capital outflow is unchanged.
Ivan, a Russian citizen, sells several hundred cases of caviar to a restaurant chain in the United States. By itself, this sale a. increases U.S. net exports and decreases Russian net exports. b. increases U.S. net exports and has no effect on Russian net exports. c. decreases U.S. net exports and increases Russian net exports. d. decreases U.S. net exports and has no effect on Russian net exports.
c. decreases U.S. net exports and increases Russian net exports.
Other things the same if reserve requirements are decreased, the reserve ratio a. decreases, the money multiplier increases, and the money supply decreases. b. increases, the money multiplier increases, and the money supply increases. c. decreases, the money multiplier increases, and the money supply increases. d. increases, the money multiplier increases, and the money supply decreases.
c. decreases, the money multiplier increases, and the money supply increases.
If purchasing-power parity holds, a dollar will buy a. one unit of each foreign currency. b. foreign currency equal to the U.S. price level divided by the foreign country's price level. c. enough foreign currency to buy as many goods as it does in the United States. d. None of the above is implied by purchasing-power parity.
c. enough foreign currency to buy as many goods as it does in the United States.
An increase in the minimum wage a. reduces structural unemployment. b. reduces frictional unemployment, c. increases structural unemployment. d. increases frictional unemployment.
c. increases structural unemployment.
In a fractional-reserve banking system, a bank a. does not make loans. b. does not accept deposits. c. keeps only a fraction of its deposits in reserve. d. None of the above is correct.
c. keeps only a fraction of its deposits in reserve.
A central bank's setting (or altering) of the money supply is known as a. open-market operation. b. interest rate policy. c. monetary policy. d. employment policy.
c. monetary policy.
Anna recently graduated from college with a degree in electrical engineering, but she has not yet started working. To be counted as "unemployed" she a. does not have to have looked for work. b. must have looked for work no more than a week ago. c. must have looked for work no more than four weeks ago. d. must have looked for work no more than twelve weeks ago.
c. must have looked for work no more than four weeks ago.
To decrease the money supply, the Fed can a. buy government bonds or increase the discount rate. b. buy government bonds or decrease the discount rate. c. sell government bonds or increase the discount rate. d. sell government bonds or decrease the discount rate.
c. sell government bonds or increase the discount rate.
If the federal funds rate were below the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by a. buying bonds. This buying would reduce reserves. b. buying bonds. This buying would increase reserves. c. selling bonds. This selling would reduce reserves. d. selling bonds. This selling would increase reserves.
c. selling bonds. This selling would reduce reserves.
When the Fed sells government bonds, a. the money supply increases and the federal funds rate increases. b. the money supply increases and the federal funds rate decreases. c. the money supply decreases and the federal funds rate increases. d. the money supply decreases and the federal funds rate decreases.
c. the money supply decreases and the federal funds rate increases.
Refer to Figure 30-1. If the money supply is MS2 and the value of money is 2, then a. the quantity of money demanded is greater than the quantity supplied; the price level will rise. b. the quantity of money demanded is greater than the quantity supplied; the price level will fall. c. the quantity of money supplied is greater than the quantity demanded; the price level will rise. d. the quantity of money supplied is greater than the quantity demanded; the price level will fall.
c. the quantity of money supplied is greater than the quantity demanded; the price level will rise.
If the demand for loanable funds shifts right, then a. the real interest rate and the equilibrium quantity of loanable funds both fall. b. the real interest rate falls and the equilibrium quantity of loanable funds rises. c. the real interest rate and the equilibrium quantity of loanable funds both rise. d. the real interest rate rises and the equilibrium quantify of loanable funds falls.
c. the real interest rate and the equilibrium quantity of loanable funds both rise.
In an open economy, gross domestic product equals $3,500 billion, consumption expenditure equals $2100 billion, government expenditure equals $400 billion, investment equals $800 billion, and net exports equals $200 billion. What is national savings? a. $200 billion b. $600 billion c. $800 billion d. $1,000 billion
d. $1,000 billion
If the reserve ratio is 8 percent, then an additional $800 of reserves can increase the money supply by as much as a. $6,400. b. $8,000. c. $12,500. d. $10,000.
d. $10,000.
If 12,000 workers are unemployed, then the minimum wage must be a. $4. b. $6. c. $14 d. $16.
d. $16.
In an open economy, gross domestic product equals $1,650 billion, government expenditure equals $250 billion, and savings equals $550 billion. What is consumption expenditure? a. $250 billion b. $300 billion c. $550 billion d. $850 billion
d. $850 billion
If domestic residents of other countries purchase $600 billion of U.S. assets and U.S residents purchase $500 billion of foreign assets, then U.S. net capital outflow is a. $100 billion and the U.S. has a trade surplus. b. $100 billion and the U.S has a trade deficit. c. -$100 billion and the U.S. has a trade surplus. d. -$100 billion and the U.S. has a trade deficit.
d. -$100 billion and the U.S. has a trade deficit.
If the nominal interest rate is 4 percent and expected inflation is 2.5 percent, then what is the expected real interest rate? a. 1.6 percent b. 10 percent c. 6.5 percent d. 1.5 percent
d. 1.5 percent
In France a loaf of bread costs 3 euros. In Great Britain a loaf of bread costs 4 pounds. If the exchange rate is .9 pounds per euro, what is the real exchange rate? a. 4/2.7 loaves of British bread per loaf of French bread b. 3.6/3 loaves of British bread per loaf of French bread c. 3/3.6 loaves of British bread per loaf of French bread d. 2.7/4 loaves of British bread per loaf of French bread
d. 2.7/4 loaves of British bread per loaf of French bread
If the price level increased from 120 to 130, then what was the inflation rate? a. 1.1 percent. b. 7.7 percent. c. 10.0 percent. d. 8.3 percent.
d. 8.3 percent. 130-130/120 x 100
When the money supply curve shifts from MS1 to MS2, a. the demand for goods and services decreases. b. the economy's ability to produce goods and services increases. c. the equilibrium price level decreases. d. None of the above is correct.
d. None of the above is correct.
If the government of India implemented a policy that decreased national saving, its real exchange rate would a. depreciate and Indian net exports would rise. b. depreciate and Indian net exports would fall. c. appreciate and Indian net exports would rise. d. appreciate and Indian net exports would fall.
d. appreciate and Indian net exports would fall
When a Japanese auto maker opens a factory in the U.S., U.S. net capital outflow a. increases because the foreign company makes a portfolio investment in the U.S. b. declines because the foreign company makes a portfolio investment in the U.S. c. increases because the foreign company makes a direct investment in capital in the U.S. d. declines because the foreign company makes a direct investment in capital in the U.S.
d. declines because the foreign company makes a direct investment in capital in the U.S
If the Fed sells government bonds to the public, then reserves a. increase and the money supply increases. b. increase and the money supply decreases. c. decrease and the money supply increases. d. decrease and the money supply decreases.
d. decrease and the money supply decreases.
When Ghana sells chocolate to the United States, U.S. net exports a. increase, and U.S. net capital outflow increases. b. increase, and U.S. net capital outflow decreases. c. decrease, and U.S. net capital outflow increases. d. decrease, and U.S. net capital outflow decreases.
d. decrease, and U.S. net capital outflow decreases.
If the demand for dollars in the market for foreign-currency exchange shifts left, then the exchange rate a. rises and the quantity of dollars exchanged rises. b. rises and the quantity of dollars exchanged does not change. c. falls and the quantity of dollars exchanged falls. d. falls and the quantity of dollars exchanged does not change.
d. falls and the quantity of dollars exchanged does not change.
Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills is called a. the natural rate of unemployment. b. cyclical unemployment. c. structural unemployment. d. frictional unemployment.
d. frictional unemployment.
Minimum-wage laws are least likely to affect the wages paid to a. teenagers. b. low-skill workers. c. inexperienced workers. d. highly-educated workers.
d. highly-educated workers.
The reserve requirement is 4 percent, banks hold no excess reserves and people hold no currency. If the Fed sells $10,000 worth of bonds, what happens to the money supply? a. it increases by $250,000 b. it increases by $200,000 c. it decreases by $200,000 d. it decreases by $250,000
d. it decreases by $250,000
Other things the same, if a country saves less, then a. net capital outflow rises, so net exports rise. b. net capital outflow rises, so net exports fall. c. net capital outflow falls, so net exports rise. d. net capital outflow falls, so net exports fall.
d. net capital outflow falls, so net exports fall.
Suppose that medical technicians and nurses' aides are not unionized. If the nurses' aides unionize, then the wages of a. both medical technicians and nurses' aides will rise. b. both medical technicians and nurses' aides will fall. c. medical technicians will rise, and the wages of nurses' aides will fall. d. nurses' aides will rise, and the wages of medical technicians will fall.
d. nurses' aides will rise, and the wages of medical technicians will fall.
When Mexico suffered from capital flight in 1994, Mexico's real interest rate a. fell and the peso appreciated. b. fell and the peso depreciated. c. rose and the peso appreciated. d. rose and the peso depreciated.
d. rose and the peso depreciated
Other things the same, an increase in the U.S. interest rate causes a. demand in the market for foreign-currency exchange to increase so the exchange rate increases. b. demand in the market for foreign-currency exchange to decrease so the exchange rate decreases. c. supply in the market for foreign-currency exchange to increase so the exchange rate decreases. d. supply in the market for foreign-currency exchange to decrease so the exchange rate increases.
d. supply in the market for foreign-currency exchange to decrease so the exchange rate increases.
In the open-economy macroeconomic model, the key determinant of net capital outflow is a. the real exchange rate. When the real exchange rate rises, net capital outflow rises. b. the real exchange rate. When the real exchange rate rises, net capital outflow falls. c. the real interest rate. When the real interest rate rises, net capital outflow rises. d. the real interest rate. When the real interest rate rises, net capital outflow falls.
d. the real interest rate. When the real interest rate rises, net capital outflow falls.
In December 1999 people feared that there might be computer problems at banks as the century changed. Consequently, people wanted to hold relatively more in currency and relatively less in deposits. In anticipation banks raised their reserve ratios to have enough cash on hand to meet depositors' demands. These actions by the public a. would increase the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have sold bonds. b. would increase the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have bought bonds. c. would reduce the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have sold bonds. d. would reduce the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have bought bonds
d. would reduce the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have bought bonds
