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