Japan Yen 125.00 10.00 9.00 45.00 200 200 200 200 50,000 2,000 2,000 8,000 Mexico Peso Sweden Krona Thailand Baht In real terms, U.S. goods are more expensive than goods in which country(ies)?
a. Brazil and Mexico
b. Japan, Sweden, and Thailand c. Japan and Sweden d. Thailand.
107．Which of the following would tend to shift the supply of dollars in foreign-currency exchange
market of the open-economy macroeconomic model to the left?
a. The exchange rate rises. b. The exchange rate falls.
c. The expected rate of return on U.S. assets rises. d. The expected rate of return on U.S. assets falls.
108．The real exchange rate equals the relative
a. price of domestic and foreign currency. b. price of domestic and foreign goods. c. rate of domestic and foreign interest. d. None of the above is correct.
109．In the open-economy macroeconomic model, if the supply of loanable funds increases, the interest rate
a. and the real exchange rate increase. b. and the real exchange rate decrease.
c. increases and the real exchange rate decreases. d. decreases and the real exchange rate increases.
110．For the following question, use the graph below.
The initial effect of an increase in the budget deficit in the loanable funds market is illustrated as a
move from
a. a to b. b. a to c. c. c to b. d. c to d.
111．When the government spends more, the initial effect is that
a. aggregate demand shifts right. b. aggregate demand shifts left. c. aggregate supply shifts right. d. aggregate supply shifts left.
112．Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the minimum wage, a major new discovery of oil, a large influx of immigrants, and new environmental regulations that reduce electricity production. In the short run, we would expect
a. the price level to rise and real GDP to fall. b. the price level to fall and real GDP to rise. c. the price level and real GDP both to stay the same. d. All of the above are possible.
113．Suppose the economy is in long-run equilibrium. In a short span of time, there is a large influx of skilled immigrants, a major new discovery of oil, and a major new technological advance in electricity production. In the short run, we would expect
a. the price level to rise and real GDP to fall. b. the price level to fall and real GDP to rise. c. the price level and real GDP both to stay the same. d. All of the above are possible.
114．According to liquidity preference theory, the money supply curve is
a. upward sloping. b. downward sloping. c. vertical. d. horizontal.
115．When the Fed buys government bonds, the reserves of the banking system
a. increase, so the money supply increases. b. increase, so the money supply decreases. c. decrease, so the money supply increases. d. decrease, so the money supply decreases.
116．According to the theory of liquidity preference, an increase in the price level causes the
a. interest rate and investment to rise. b. interest rate and investment to fall. c. interest rate to rise and investment to fall. d. interest rate to fall and investment to rise.
117．If the stock market crashes,
a. aggregate demand increases, which the Fed could offset by increasing the money supply. b. aggregate demand increases, which the Fed could offset by decreasing the money supply. c. aggregate demand decreases, which the Fed could offset by increasing the money supply. d. aggregate demand decreases, which the Fed could offset by decreasing the money supply.
118．If the MPC = 3/5, then the government purchases multiplier is
a. 5/3. b. 5/2. c. 5. d. 15.
119．If the government raises government expenditures, in the short run, prices
a. rise and unemployment falls. b. fall and unemployment rises. c. and unemployment rise. d. and unemployment fall.
120．If the long-run Phillips curve shifts to the left, for any given rate of money growth and inflation
the economy will have
a. higher unemployment and lower output. b. higher unemployment and higher output. c. lower unemployment and lower output. d. lower unemployment and higher output.
121．Robert works as a lawyer.
a. GDP computations should be made using his income from providing legal services, not his production of legal services.
b. GDP computations should be made using his production, not his income from providing legal services.
c. GDP computations should include both his income and his production. d. GDP computations should include either his income or his production, but not both.
122．The steps involved in calculating the consumer price index include, in order:
a. choose a base year, fix the basket, compute the inflation rate, compute the basket's cost, and compute the index.
b. choose a base year, find the prices, fix the basket, compute the basket's cost, and compute the index.
c. fix the basket, find the prices, compute the basket's cost, choose a base year and compute the index.
d. fix the basket, find the prices, compute the inflation rate, choose a base year and compute the index.
123．A German automobile company produces cars in the United States, some of which are
exported to other nations. If the price of these cars increases, the GDP deflator
a. and the CPI will both increase.
b. will increase and the CPI will be unchanged. c. will be unchanged and the CPI will increase. d. and the CPI will both be unchanged.
124．Suppose that there are diminishing returns to capital. Suppose also that two countries
are the same except one has less capital and so less real GDP per person than the other. Finally, suppose that the saving rate in both countries increases from 5 percent to 6 percent. Over the next ten years we would expect that
a. the growth rate will not change in either country. b. the country with less capital will grow faster. c. the country with more capital will grow faster. d. both countries will grow at the same rate.
125．Real GDP per person
a. minus real GDP per person from the previous period equals the growth rate of real GDP per person.
b. provides more meaningful comparisons across time and countries than real GDP. c. is population divided by GDP.
d. All of the above are correct.
126．Which of the following is correct?
a. Lenders sell bonds and borrowers buy them.
b. Long-term bonds usually pay a lower interest rate than do short-term bonds because long-term bonds are riskier.
c. Junk bonds refer to bonds that have been resold many times. d. None of the above are correct.
127．Municipal bonds pay a
a. low rate of interest because of their high-default risk and because the interest they pay is subject to federal income tax.
b. low rate of interest because of their low-default risk and because the interest they pay is not subject to federal income tax.
c. high rate of interest because of their high-default risk and because federal taxes must be paid on the interest they pay.
d. high rate of interest because of their low-default risk and because the interest they pay is not subject to federal income tax.
128．Which of the following games might a risk-averse person be willing to play?
a. A game where she has a 50 percent chance of winning $1 and a 50 percent chance of losing $1.
b. A game where she has a 60 percent chance of winning $1 and a 40 percent chance of losing $1. c. Both of the above. d. Neither of the above.
129．The BLS recently reported that there were 48.6 million people over age 25 who had at
least a bachelor's degree. Of this number, 38.0 million were in the labor force and 36.9 million were employed. What was the labor-force participation rate and the unemployment rate for this group?
a. about 97 percent and about 2.9 percent b. about 97 percent and about 2.3 percent c. about 78 percent and about 2.9 percent d. about 78 percent and about 2.3 percent
130．Money market mutual funds are included in
a. M1 but not M2. b. M1 and M2. c. M2 but not M1.