78．In an open economy,
a. net capital outflow = imports. b. net capital outflow = net exports. c. net capital outflow = exports. d. None of the above is correct.
79．In the open-economy macroeconomic model, the real exchange rate is determined in the market where dollars are exchanged for foreign currency by the equality of the supply of dollars, which comes from
a. U.S. national saving and the demand for dollars for U.S. net exports. b. U.S. net capital outflow and the demand for dollars for U.S. net exports. c. domestic investment and the demand for U.S. net exports. d. foreign demand for U.S. goods and U.S. demand for foreign goods.
80．If a government increases its budget deficit, then interest rates
a. rise and the trade balance moves toward surplus. b. rise and the trade balance moves toward deficit. c. fall and the trade balance moves toward surplus. d. fall and the trade balance moves toward deficit.
81．Investment spending decreases when the price level
a. rises causing interest rates to rise. b. rises causing interest rates to fall. c. falls causing interest rates to rise. d. falls causing interest rates to fall.
82．An increase in the price level and a decrease in real GDP in the short run could be created by
a. an increase in the money supply. b. an increase in government expenditures. c. a fall in stock prices. d. bad weather in farm states.
83．Which part of real GDP fluctuates most over the course of the business cycle?
a. consumption
b. government expenditures c. investment d. net exports
84．According to liquidity preference theory, the price level and interest rate are
a. positively related as are the interest rate and aggregate demand.
b. inversely related as are the interest rate and aggregate demand.
c. positively related while the interest rate and aggregate demand are inversely related. d. inversely related while the interest rate and aggregate demand are positively related.
85．Which of the following shifts aggregate demand to the right?
a. an increase in the price level b. an increase in the money supply c. a decrease in the price level d. a decrease in the money supply
86．If the Fed conducts open-market sales, the money supply
a. increases and aggregate demand shifts right. b. increases and aggregate demand shifts left. c. decreases and aggregate demand shifts right. d. decreases and aggregate demand shifts left.
87．Some economists argue that
a. monetary policy should actively be used to stabilize the economy. b. fiscal policy should actively be used to stabilize the economy. c. fiscal policy can be used to shift the AD curve. d. All of the above are correct.
88．The lag problem associated with monetary policy is due mostly to
a. the fact that business firms make investment plans far in advance.
b. the political system of checks and balances that slows down the process of determining monetary policy.
c. the time it takes for changes in government spending to affect the interest rate. d. All of the above are correct.
89．A. W. Phillips' findings were based on data
a. from 1861-1957 for the United Kingdom. b. from 1861-1957 for the United States.
c. mostly from the post-World War II period in the United Kingdom. d. mostly from the post-World War II period in the United States.
90．Which of the following is true concerning the long-run Phillips curve?
a. Its position is determined primarily by monetary factors. b. If it shifts right, long-run aggregate supply shifts right. c. It cannot be changed by any government policy. d. its position depends on the natural rate of unemployment.
91．In the United States real GDP is reported each quarter.
a. These numbers are adjusted to make them measure at annual and seasonally adjusted rates. b. These numbers are adjusted to make them annual rates, but no adjustment for seasonal variations are made.
c. These numbers are quarterly rates that have been seasonally adjusted. d. These numbers are at quarterly rates and have not been seasonally adjusted.
92．The price of CD players increases dramatically, causing a 1 percent increase in the CPI. The price increase will most likely cause the GDP deflator to increase by
a. more than 1 percent. b. less than 1 percent. c. 1 percent.
d. It is impossible to make an informed guess without more information.
93．If increases in the prices of U.S. medical care cause the CPI to increase by 2 percent, the GDP
deflator will likely increase by
a. more than 2 percent. b. 2 percent. c. less than 2 percent. d. All of the above are correct.
94．The traditional view of the production process is that capital is subject to
a. constant returns. b. increasing returns. c. diminishing returns.
d. diminishing returns for low levels of capital, and increasing returns for high levels of capital.
95．Which of the following is correct?
a. Political instability can reduce foreign investment, reducing growth.
b. Gary's Becker proposal to pay mothers in developing countries to keep their children in school has not worked very well in practice.
c. Policies designed to prevent imports from other countries generally increase economic growth.
d. All of the above are correct.
Sym GIS Yld % PE 2.5 35 Vol 100s 13758 Hi 44.3 Lo 43.5 Close 43.97 Net Chg -0.63 96．Use the following table to answer the following question. Stock GenMills Gillette Graco Hershey G GGG HSY 2.2 1.2 2.1 31 16 38 30428 705 5418 31.1 24.2 63.4 29.7 23.1 61.7 30 23.95 62.45 0.17 -0.53 0.72 Assume that the closing price was also the average price at which each stock transaction took place.
What was the total dollar volume of Gillette stock traded that day?
a. $912,840,000 b. $91,284,000 c. $9,128,400 d. $912,840
97．Suppose that in a closed economy GDP is equal to 10,000, taxes are equal to 2,500 Consumption equals 6,500 and Government expenditures equal 2,000. What are private saving, public saving, and national saving?
a. 1500, 1000, 500 b. 1000, 500, 1500 c. 500, 1500, 1000
d. None of the above are correct.
98．Risk-averse people will choose different asset portfolios than people who are not risk averse. Over a long period of time, we would expect that
a. every risk-averse person will earn a higher rate of return than every non-risk averse person. b. every risk-averse person will earn a lower rate of return than every non-risk averse person. c. the average risk-averse person will earn a higher rate of return than the average non-risk averse person.
d. the average risk-averse person will earn a lower rate of return than the average non-risk averse person.
99．The natural rate of unemployment is the
a. unemployment rate that would prevail with zero inflation. b. rate associated with the highest possible level of GDP.
c. difference between the long-run and short-run unemployment rates. d. amount of unemployment that the economy normally experiences.
100．Suppose that the reserve ratio is 5 percent and that a bank has $1,000 in deposits. Its required reserves are
c.$95. d.
$950.
a.$5. b.
$50.
101．Suppose a bank has $200,000 in deposits and $190,000 in loans. It has a reserve ratio of
a. 5 percent b. 9.5 percent c. 10 percent
d. None of the above is correct.
102．The inflation tax
a. transfers wealth from the government to households. b. is the increase in income taxes due to lack of indexation. c. is a tax on everyone who holds money. d. All of the above are correct.
103．In 1898, prospectors on the Klondike River discovered gold. This discovery caused an
unexpected price level
a. decrease that helped creditors at the expense of debtors. b. decrease that helped debtors at the expense of creditors. c. increase that helped creditors at the expense of debtors. d. increase that helped debtors at the expense of creditors.
104．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 has no effect on Russian net exports. b. increases U.S. net exports and decreases Russian net exports. c. decreases U.S. net exports and has no effect on Russian net exports. d. decreases U.S. net exports and increases Russian net exports.
105．Suppose that the real exchange rate between the United States and Kenya is defined in terms of baskets of goods. Which of the following will increase the real exchange rate (that is increase the number of baskets of Kenyan goods a basket of U.S. goods buys)?
Country Brazil Currency Real Currency per U.S. Dollar 4.00 U.S. Price Country Index 200 Price Index 800 a. an increase in the number of Kenyan shillings that can be purchased with a dollar b. an increase in the price of U.S. baskets of goods
c. a decrease in the price in Kenyan shillings of Kenyan goods d. All of the above are correct.
106．Use the (hypothetical) information in the following table to answer the next question.