Question 1

Use the figure below to answer the following question(s).
Figure 9-2  
-The economy depicted in Figure 9-2 is experiencing

Accepted Answer

A) an abnormally high rate of unemployment. 
B) an abnormally low rate of unemployment. 
C) its natural rate of unemployment. 
D) an output that cannot be sustained. 
A) an abnormally high rate of unemployment. 
B) an abnormally low rate of unemployment. 
C) its natural rate of unemployment. 
D) an output that cannot be sustained.

Question 2

When equilibrium is present in the foreign exchange market, which of the following will tend to be in balance?

Accepted Answer

A) the value of goods exported and the value of goods imported 
B) real and nominal interest rates 
C) imports plus capital outflow and exports plus capital inflow 
D) tax revenues and government expenditures 
A) the value of goods exported and the value of goods imported 
B) real and nominal interest rates 
C) imports plus capital outflow and exports plus capital inflow 
D) tax revenues and government expenditures

Question 3

Use the figure below to answer the following question(s).
Figure 9-2  
-The economy depicted in Figure 9-2 is

Accepted Answer

A) operating at less than full employment. 
B) operating at more than full employment. 
C) in short-run equilibrium but not long-run equilibrium. 
D) in long-run equilibrium. 
A) operating at less than full employment. 
B) operating at more than full employment. 
C) in short-run equilibrium but not long-run equilibrium. 
D) in long-run equilibrium.

Question 4

If the dollar price of the English pound goes from $1.50 to $1.20, the dollar has

Accepted Answer

A) appreciated, and Americans will find English goods cheaper. 
B) appreciated, and Americans will find English goods more expensive. 
C) depreciated, and Americans will find English goods cheaper. 
D) depreciated, and Americans will find English goods more expensive. 
A) appreciated, and Americans will find English goods cheaper. 
B) appreciated, and Americans will find English goods more expensive. 
C) depreciated, and Americans will find English goods cheaper. 
D) depreciated, and Americans will find English goods more expensive.

Question 5

You just bought a $1,000 bond that is scheduled to mature in ten years. If interest rates rise during the next six months, the market value (or price) of your bond will

Accepted Answer

A) increase. 
B) decrease. 
C) remain unchanged. 
D) increase or decrease, depending on the marginal tax bracket you are in. 
A) increase. 
B) decrease. 
C) remain unchanged. 
D) increase or decrease, depending on the marginal tax bracket you are in.

Question 6

Use the figure below to answer the following question(s).
Figure 9-2  
-Which of the following is true for the economy depicted in Figure 9-2?

Accepted Answer

A) Potential output exceeds y1. 
B) When output y1 is achieved, the actual rate of unemployment will exceed the natural rate of unemployment. 
C) When output y1 is achieved, the actual rate of unemployment will be less than the natural rate of unemployment. 
D) When output y1 is achieved, the actual rate of unemployment will equal the economy's natural rate of unemployment. 
A) Potential output exceeds y1. 
B) When output y1 is achieved, the actual rate of unemployment will exceed the natural rate of unemployment. 
C) When output y1 is achieved, the actual rate of unemployment will be less than the natural rate of unemployment. 
D) When output y1 is achieved, the actual rate of unemployment will equal the economy's natural rate of unemployment.

Question 7

Which of the following would generate a supply of euros in exchange for dollars?

Accepted Answer

A) American demand for European real estate. 
B) European demand for U.S.government bonds. 
C) Americans vacationing in Europe. 
D) Purchase of French wines by U.S.importers. 
A) American demand for European real estate. 
B) European demand for U.S.government bonds. 
C) Americans vacationing in Europe. 
D) Purchase of French wines by U.S.importers.

Question 8

If the price level in the current period is lower than what buyers and sellers anticipated,

Accepted Answer

A) profit margins will be unattractive, and firms will expand output. 
B) profit margins will be unattractive, and firms will reduce output. 
C) profit margins will be attractive, and firms will expand output. 
D) profit margins will be attractive, and firms will reduce output. 
A) profit margins will be unattractive, and firms will expand output. 
B) profit margins will be unattractive, and firms will reduce output. 
C) profit margins will be attractive, and firms will expand output. 
D) profit margins will be attractive, and firms will reduce output.

Question 9

If for some reason Americans wished to purchase more foreign assets, then other things the same

Accepted Answer

A) both the real exchange rate and the quantity of dollars exchanged in the market for foreign-currency exchange would fall. 
B) both the real exchange rate and the quantity of dollars exchanged in the market for foreign-currency would rise. 
C) the real exchange rate would rise and the quantity of dollars exchanged in the market for foreign-currency would fall. 
D) the real exchange rate would fall and the quantity of dollars exchanged in the market for foreign-currency would rise. 
A) both the real exchange rate and the quantity of dollars exchanged in the market for foreign-currency exchange would fall. 
B) both the real exchange rate and the quantity of dollars exchanged in the market for foreign-currency would rise. 
C) the real exchange rate would rise and the quantity of dollars exchanged in the market for foreign-currency would fall. 
D) the real exchange rate would fall and the quantity of dollars exchanged in the market for foreign-currency would rise.

Question 10

An appreciation in the U.S. dollar would

Accepted Answer

A) encourage foreigners to make investments in the United States. 
B) discourage foreign consumers from buying U.S.goods. 
C) increase the number of dollars it would take to buy a Swiss franc. 
D) encourage foreigners to buy more U.S.goods. 
A) encourage foreigners to make investments in the United States. 
B) discourage foreign consumers from buying U.S.goods. 
C) increase the number of dollars it would take to buy a Swiss franc. 
D) encourage foreigners to buy more U.S.goods.

Question 11

The actual rate of unemployment will be greater than the natural rate of unemployment when

Accepted Answer

A) the actual output is less than the economy's potential output. 
B) the actual output is greater than the economy's potential output. 
C) the actual output is equal to the economy's potential output. 
D) the inflation rate has been relatively constant for several years. 
A) the actual output is less than the economy's potential output. 
B) the actual output is greater than the economy's potential output. 
C) the actual output is equal to the economy's potential output. 
D) the inflation rate has been relatively constant for several years.

Question 12

If expected inflation is constant, then when the nominal interest rate increases, the real interest rate

Accepted Answer

A) increases by more than the change in the nominal interest rate. 
B) increases by the change in the nominal interest rate. 
C) decreases by the change in the nominal interest rate. 
D) decreases by more than the change in the nominal interest rate. 
A) increases by more than the change in the nominal interest rate. 
B) increases by the change in the nominal interest rate. 
C) decreases by the change in the nominal interest rate. 
D) decreases by more than the change in the nominal interest rate.

Question 13

Use the figure below to answer the following question(s).
Figure 9-2  
-Figure 9-2 indicates that the output of the economy, y1, is

Accepted Answer

A) greater than the economy's long-run capacity. 
B) equal to the economy's long-run capacity. 
C) less than the economy's long-run capacity. 
D) not consistent will full employment of the economy's resources. 
A) greater than the economy's long-run capacity. 
B) equal to the economy's long-run capacity. 
C) less than the economy's long-run capacity. 
D) not consistent will full employment of the economy's resources.

Question 14

If expected inflation is constant, then when the nominal interest rate falls, the real interest rate

Accepted Answer

A) falls by more than the change in the nominal interest rate. 
B) falls by the change in the nominal interest rate. 
C) rises by the change in the nominal interest rate. 
D) rises by more than the change in the nominal interest rate. 
A) falls by more than the change in the nominal interest rate. 
B) falls by the change in the nominal interest rate. 
C) rises by the change in the nominal interest rate. 
D) rises by more than the change in the nominal interest rate.

Question 15

The potential output of an economy is the level of output produced when the

Accepted Answer

A) real wage equals the nominal wage. 
B) price level is constant. 
C) expected real wage equals the inflation rate. 
D) expected price level equals the unemployment rate. 
E) expected price level equals the actual price level. 
A) real wage equals the nominal wage. 
B) price level is constant. 
C) expected real wage equals the inflation rate. 
D) expected price level equals the unemployment rate. 
E) expected price level equals the actual price level.

Question 16

An unanticipated increase in the level of prices in the goods and services market, which results in a temporary reduction in real wage rates, will

Accepted Answer

A) decrease the natural rate of unemployment. 
B) increase the natural rate of unemployment. 
C) result in an actual rate of unemployment that is less than the natural rate of unemployment. 
D) result in an actual rate of unemployment that is greater than the natural rate of unemployment. 
A) decrease the natural rate of unemployment. 
B) increase the natural rate of unemployment. 
C) result in an actual rate of unemployment that is less than the natural rate of unemployment. 
D) result in an actual rate of unemployment that is greater than the natural rate of unemployment.

Question 17

You put money into an account. One year later you see that you have 6 percent more dollars and that your money will buy 2 percent more goods.

Accepted Answer

A) The nominal interest rate was 8 percent and the inflation rate was 6 percent. 
B) The nominal interest rate was 6 percent and the inflation rate was 4 percent. 
C) The nominal interest rate was 4 percent and the inflation rate was 2 percent. 
D) None of the above is correct. 
A) The nominal interest rate was 8 percent and the inflation rate was 6 percent. 
B) The nominal interest rate was 6 percent and the inflation rate was 4 percent. 
C) The nominal interest rate was 4 percent and the inflation rate was 2 percent. 
D) None of the above is correct.

Question 18

As the U.S. price level rises relative to price levels in other countries, what would happen in the U.S.?

Accepted Answer

A) consumption and net exports would decline 
B) consumption and net exports would increase 
C) consumption would increase and net exports would decrease 
D) consumption would decrease and net exports would increase 
E) consumption and net exports would remain constant 
A) consumption and net exports would decline 
B) consumption and net exports would increase 
C) consumption would increase and net exports would decrease 
D) consumption would decrease and net exports would increase 
E) consumption and net exports would remain constant

Question 19

In the AD/AS model, the aggregate demand for goods and services is composed of the purchases made by

Accepted Answer

A) households and foreigners (net exports). 
B) businesses, bondholders, and foreigners (net exports). 
C) businesses and governments. 
D) consumers, investors, governments, and foreigners (net exports). 
A) households and foreigners (net exports). 
B) businesses, bondholders, and foreigners (net exports). 
C) businesses and governments. 
D) consumers, investors, governments, and foreigners (net exports).

Question 20

In the short run, a price increase in the goods and services market will

Accepted Answer

A) increase the purchasing power of money. 
B) improve producer profits and, thereby, induce suppliers to expand output. 
C) increase resource prices, lower profits, and lead to a decline in output. 
D) reduce the natural rate of unemployment. 
A) increase the purchasing power of money. 
B) improve producer profits and, thereby, induce suppliers to expand output. 
C) increase resource prices, lower profits, and lead to a decline in output. 
D) reduce the natural rate of unemployment.

Use the figure below to answer the following question(s). Figure 9-2 -The economy depicted in Figure 9-2 is experiencing

When equilibrium is present in the foreign exchange market, which of the following will tend to be in balance?

Use the figure below to answer the following question(s). Figure 9-2 -The economy depicted in Figure 9-2 is

If the dollar price of the English pound goes from $1.50 to $1.20, the dollar has

You just bought a $1,000 bond that is scheduled to mature in ten years. If interest rates rise during the next six months, the market value (or price) of your bond will

Use the figure below to answer the following question(s). Figure 9-2 -Which of the following is true for the economy depicted in Figure 9-2?

Which of the following would generate a supply of euros in exchange for dollars?

If the price level in the current period is lower than what buyers and sellers anticipated,

If for some reason Americans wished to purchase more foreign assets, then other things the same

An appreciation in the U.S. dollar would

The actual rate of unemployment will be greater than the natural rate of unemployment when

If expected inflation is constant, then when the nominal interest rate increases, the real interest rate

Use the figure below to answer the following question(s). Figure 9-2 -Figure 9-2 indicates that the output of the economy, y₁, is

If expected inflation is constant, then when the nominal interest rate falls, the real interest rate

The potential output of an economy is the level of output produced when the

An unanticipated increase in the level of prices in the goods and services market, which results in a temporary reduction in real wage rates, will

You put money into an account. One year later you see that you have 6 percent more dollars and that your money will buy 2 percent more goods.

As the U.S. price level rises relative to price levels in other countries, what would happen in the U.S.?

In the AD/AS model, the aggregate demand for goods and services is composed of the purchases made by

In the short run, a price increase in the goods and services market will

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Exam 9: An Introduction to Basic Macroeconomic Markets

Use the figure below to answer the following question(s). Figure 9-2 -The economy depicted in Figure 9-2 is experiencing

When equilibrium is present in the foreign exchange market, which of the following will tend to be in balance?

Use the figure below to answer the following question(s). Figure 9-2 -The economy depicted in Figure 9-2 is

If the dollar price of the English pound goes from $1.50 to $1.20, the dollar has

You just bought a $1,000 bond that is scheduled to mature in ten years. If interest rates rise during the next six months, the market value (or price) of your bond will

Use the figure below to answer the following question(s). Figure 9-2 -Which of the following is true for the economy depicted in Figure 9-2?

Which of the following would generate a supply of euros in exchange for dollars?

If the price level in the current period is lower than what buyers and sellers anticipated,

If for some reason Americans wished to purchase more foreign assets, then other things the same

An appreciation in the U.S. dollar would

The actual rate of unemployment will be greater than the natural rate of unemployment when

If expected inflation is constant, then when the nominal interest rate increases, the real interest rate

Use the figure below to answer the following question(s). Figure 9-2 -Figure 9-2 indicates that the output of the economy, y1, is

If expected inflation is constant, then when the nominal interest rate falls, the real interest rate

The potential output of an economy is the level of output produced when the

An unanticipated increase in the level of prices in the goods and services market, which results in a temporary reduction in real wage rates, will

You put money into an account. One year later you see that you have 6 percent more dollars and that your money will buy 2 percent more goods.

As the U.S. price level rises relative to price levels in other countries, what would happen in the U.S.?

In the AD/AS model, the aggregate demand for goods and services is composed of the purchases made by

In the short run, a price increase in the goods and services market will

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Use the figure below to answer the following question(s). Figure 9-2 -Figure 9-2 indicates that the output of the economy, y₁, is