Macro test
if M = 3000, P=2 and Y= 6000, what is the velocity
4
The nominal exchange rate is 30 thai that for one U.S dollar. A sub sandwich combo deal in the U.S. costs $6 dollars in the U.S. and 120 that in thailand. The real exchange rate is
3/2
Which of the following fall during a recession?
Both retail sales and employment
If a lobster in Maine costs $10 and that the same type of lobster in massachusetts costs $30, then people could make a profit by
Buying lobsters in maine and selling them in massachusetts. This action would decrease the price of lobster in massachusetts
According to the liquidity theory, the money-supply curve would shift rightward
If the federal reserve chose to increase the money supply
In the context of aggregate demand and aggregate supply, the wealth effect refers to the idea that, when the price level decreases, the real wealth of households,
Increases and as a result consumption spending increases. This effect contribute to the downward slope of the aggregate-demand curve
The position of the long-run aggregate supply curve
Is determined by resource usage of technology
When the price level rises more than expected, a firm with a sticky price will sell its output at a price that is
Less than it desires and increase its production
When the dollar depreciates, U.S.
Net exports rise, which increases the aggregate quantity of goods and services demanded.
The term hyperinflation refers to
a period of very high inflation
which of the following is an example of menu costs
deciding new prices, printing new price lists, advertising new prices,
in the aggregate demand and aggregate supply model, sticky wages, sticky prices, and misperceptions about relative prices,
have temporary effects
When the money supply increases
interest rates fall and so aggregate demand shifts right
At an interest rate of 4 percent, there is an excess
supply of money equal to the distance between points a and b
Using the liquidity-preference model, when the federal reserve decreases the money supply,
the equilibrium interest rate increases
Tax cuts shifts aggregate demand
right as do increases in government spending
When production costs rise,
the short-run aggregate supply curve shifts to the left
the shoe leather cost of inflation refers to
the waste of resources used to maintain lower money holdings
Which of the following fed actions would both decrease the money supply
sell bonds and raise the reserve requirement
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
$50 billion
A country has national saving of $90 billion, government expenditures of $30 billion, domestic invest of $50 billion, and net capital outflow of $40 billion. What is its demand for loanable funds?
$90 billion
Suppose that a country imports $90 million worth of goods and services and exports $80 million worth of goods and secretes. What is the value of net exports?
-$10 million
If the exchange rate is 2 brazillian reals per dollar and a meal in Rio costs 20 Reals, then how many dollars does it take to buy a meal in Rio
10 and your purchase will increase Brazil's net exports
If the price level increased from 120 to 144, then what was the inflation rate?
20 percent
suppose businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases. Their reaction would initially shift,
Aggregate demand left
If the money-supply curve MS on the left-hand graph were to shift to the left, this would
All the above are correct
A decrease in Y from Y1 to Y2 is explained as follows:
An increase in P from P1 to P2 causes the money-demand curve to shift from md1 to md2; this shift of MD causes R to increase from r1 to r2; and this increase in r causes Y to decrease from Y1 to Y2
An american brewery sells dollars to obtain euros. It then uses the euros to buy brewing equipment from a german company. These transactions
Decrease U.S. net capital outflow because germans obtain U.S. assets
People are likely to want to hold more money if the interest rate
Decreases, making the opportunity cost of holding money fall
other things the same, if the workers and firms expected prices to rise by 2 percent but instead they rise by 3 percent, then
Employment and production rise
An increase in household saving causes consumption to
Fall and aggregate demand to decrease
net capital outflow is defined as the purchase of
Foreign assets by domestic residents minus the purchase of domestic assets by foreign residents
Suppose the price level rises, but the number of dollars you are paid per hour stays the same. This means that your
Real wage is lower
An increase in the budget deficit
Reduces investment because the interest rate rises
In the open-economy macroeconomic model, the market for loanable funds identity can be written as
S = I + NCO
on a sunday morning, tom sold 300 cups of coffee for a total of $750
The $750 is a nominal variable. the cups of coffee is a real variable
Recession in canada and Mexico would cause
The U.S. price level and real GDP to fall
Economic expansions in Europe and china cause
The U.S. price level and real GDP to rise
You are planning a graduation trip to mexico. other things the same, if the dollar appreciates relative to the peso, then
The dollar buys more pesos. your hotel room in mexico will require fewer dollars.
You are staying in london over the summer and you have a number of dollars with you. if the dollar appreciates relative to the british pound, then other things the same.
The dollar would buy more pounds, the appreciation would encourage you to buy more british goods and services
As we move from one point to another along the money-demand curve md1,
The price level is held fixed at P1
If the actual price is 165, but people had been expecting it to be 160, then
The quantity of output supplied rises but only in the short run
If U.S. residents purchase $600 billion worth of foreign assets and foreigners purchase $300 billion worth of U.S. assets,
U.S. net capital outflow is $300 billion; capital is flowing out of the U.S.
Which of the following is most likely to result if foreigners decide to withdraw the funds that they have loaned to the united states
U.S. net capital outflow will rise
A farmer in Mexico purchases a tractor made in the U.S. This purchase is an example of
a U.S export and a mexican import
The initial impact of an increase in an investment tax credit is to shift
aggregate demand right
Which of the following shifts long-run aggregate supply right?
an increase in either technology or the human capital stock
If the CPI rises, the number of dollars needed to buy a representative basket of goods
increases and so the value of money falls.
According to the liquidity preference theory, an increase in the overall price level of 10 percent
increases the equilibrium interest rate which in turn decreases the quantity of goods and services demanded
A pair of running shoes cost $70 in the U.S. If the price of the same shoes is 4500 rupees in india and the exchange rate is 60 rupees per dollar, than the real exchange rate is
less than 1, so profit could be made by buying these shoes in the U.S and selling them in India
If a dollar currently purchases 12.5 pesos and someone forecasts that in a year it will purchase 14 pesos, then the forecast is given in
nominal terms and implies the dollar will appreciate
if the current interest rate is 2 percent
people will sell more bonds, which drives interest rates up
Liquidity refers to
the ease with which an asset is converted into a medium of exchange
In the graph of the money market, the money supply curve is
vertical, it shifts rightward if the fed buys bonds