Question 1

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 2

Use the figure below to answer the following question(s). Figure 9-2
  When an economy is experiencing the aggregate demand and supply conditions depicted in Figure 9-2,

Accepted Answer

A)  the actual rate of unemployment will equal the natural rate of unemployment. 
B)  buyers and sellers will have correctly anticipated the level of prices P1. 
C)  the output y1 will tend to persist into the future unless market conditions change. 
D)  all of the above are correct. 
A)  the actual rate of unemployment will equal the natural rate of unemployment. 
B)  buyers and sellers will have correctly anticipated the level of prices P1. 
C)  the output y1 will tend to persist into the future unless market conditions change. 
D)  all of the above are correct.

Question 3

If the quantity supplied of euro were greater than the quantity demanded, then the price of the

Accepted Answer

A)  euro would rise. 
B)  euro would fall. 
C)  dollar would fall. 
D)  euro would be in equilibrium. 
A)  euro would rise. 
B)  euro would fall. 
C)  dollar would fall. 
D)  euro would be in equilibrium.

Question 4

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 5

Which of the following will most likely result from an unexpected increase in prices that decreases real wages and resource prices?

Accepted Answer

A)  a decrease in unemployment 
B)  an increase in unemployment 
C)  a decrease in the nominal interest rate 
D)  a decrease in aggregate supply and real output 
A)  a decrease in unemployment 
B)  an increase in unemployment 
C)  a decrease in the nominal interest rate 
D)  a decrease in aggregate supply and real output

Question 6

If the real interest rate in the domestic loanable funds market increases,

Accepted Answer

A)  firms will have an added incentive to undertake investment projects. 
B)  households will save less. 
C)  the net inflow of foreign capital will tend to increase. 
D)  it will be cheaper to purchase goods and services now rather than in the future. 
A)  firms will have an added incentive to undertake investment projects. 
B)  households will save less. 
C)  the net inflow of foreign capital will tend to increase. 
D)  it will be cheaper to purchase goods and services now rather than in the future.

Question 7

If the expected inflation rate is 3 percent and banks charge a 10 percent money rate of interest, the real rate of interest is

Accepted Answer

A)  3 percent. 
B)  7 percent. 
C)  10 percent. 
D)  17 percent. 
A)  3 percent. 
B)  7 percent. 
C)  10 percent. 
D)  17 percent.

Question 8

As prices rise, consumers and businesses will want to hold larger money balances. This will lead to

Accepted Answer

A)  a reduction in the demand for resources and reduced resource prices. 
B)  an increase in the amount of goods and services demanded due to the real balance effect. 
C)  an increase in exports due to the international substitution effect. 
D)  a reduction in the supply of loanable funds and an increase in the interest rate. 
A)  a reduction in the demand for resources and reduced resource prices. 
B)  an increase in the amount of goods and services demanded due to the real balance effect. 
C)  an increase in exports due to the international substitution effect. 
D)  a reduction in the supply of loanable funds and an increase in the interest rate.

Question 9

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 10

The supply of resources, level of technology, and the quality of an economy's institutional arrangements provide the constraint that determines the shape of the

Accepted Answer

A)  short-run aggregate supply curve. 
B)  long-run aggregate supply curve. 
C)  supply of loanable funds. 
D)  aggregate demand curve. 
A)  short-run aggregate supply curve. 
B)  long-run aggregate supply curve. 
C)  supply of loanable funds. 
D)  aggregate demand curve.

Question 11

If prices in the United States rose, which of the following could be directly attributed to the international substitution effect?

Accepted Answer

A)  Americans reduce their purchases of Japanese cars. 
B)  Australians buy more American surfboards. 
C)  Europeans purchase fewer American-made personal computers. 
D)  Americans sell more wheat to India. 
A)  Americans reduce their purchases of Japanese cars. 
B)  Australians buy more American surfboards. 
C)  Europeans purchase fewer American-made personal computers. 
D)  Americans sell more wheat to India.

Question 12

Which of the following is a correct statement?

Accepted Answer

A)  Fiscal policy is the use of tax and spending policies by Congress and the president. 
B)  Fiscal policy involves the control of the money supply by the Federal Reserve Bank. 
C)  Monetary policy involves the control of the money supply by Congress and the president. 
D)  Monetary policy is the use of tax and spending policies by the Federal Reserve Bank. 
A)  Fiscal policy is the use of tax and spending policies by Congress and the president. 
B)  Fiscal policy involves the control of the money supply by the Federal Reserve Bank. 
C)  Monetary policy involves the control of the money supply by Congress and the president. 
D)  Monetary policy is the use of tax and spending policies by the Federal Reserve Bank.

Question 13

If the dollar price of the English pound goes from $1.30 to $1.10, the dollar has

Accepted Answer

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

Question 14

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 15

Imagine that there are only two nations in the world, the United States and Mexico. If Americans buy more goods made in Mexico, other things constant, the

Accepted Answer

A)  U.S. demand curve for Mexican pesos will shift rightward 
B)  U.S. demand curve for Mexican pesos will shift leftward 
C)  U.S. supply curve of Mexican pesos will shift leftward 
D)  U.S. supply curve of Mexican pesos will shift rightward 
A)  U.S. demand curve for Mexican pesos will shift rightward 
B)  U.S. demand curve for Mexican pesos will shift leftward 
C)  U.S. supply curve of Mexican pesos will shift leftward 
D)  U.S. supply curve of Mexican pesos will shift rightward

Question 16

Once decision makers fully adjust to an increase in prices,

Accepted Answer

A)  the natural rate of unemployment will decline. 
B)  competitive forces will restore the usual relationship between product prices and costs. 
C)  producers' profits will exceed their normal level. 
D)  producers will expand output beyond the economy's potential. 
A)  the natural rate of unemployment will decline. 
B)  competitive forces will restore the usual relationship between product prices and costs. 
C)  producers' profits will exceed their normal level. 
D)  producers will expand output beyond the economy's potential.

Question 17

If the actual price level exceeds the expected price level reflected in long-term contracts,

Accepted Answer

A)  firms will find production more profitable than they had expected and will decrease the quantity of output supplied 
B)  firms will find production less profitable than they had expected and will decrease the quantity of output supplied 
C)  firms will find production less profitable than they had expected and will increase the quantity of output supplied 
D)  unemployment will decrease 
A)  firms will find production more profitable than they had expected and will decrease the quantity of output supplied 
B)  firms will find production less profitable than they had expected and will decrease the quantity of output supplied 
C)  firms will find production less profitable than they had expected and will increase the quantity of output supplied 
D)  unemployment will decrease

Question 18

If the money interest rate is 7 percent and the inflationary premium 4 percent, the real interest rate is

Accepted Answer

A)  −3 percent. 
B)  3 percent. 
C)  4 percent. 
D)  7 percent. 
A)  −3 percent. 
B)  3 percent. 
C)  4 percent. 
D)  7 percent.

Question 19

In the loanable funds market, the price that borrowers must pay for earlier availability is the

Accepted Answer

A)  inflation rate. 
B)  wage rate. 
C)  interest rate. 
D)  exchange rate. 
A)  inflation rate. 
B)  wage rate. 
C)  interest rate. 
D)  exchange rate.

An appreciation in the U.S. dollar would

Use the figure below to answer the following question(s). Figure 9-2 When an economy is experiencing the aggregate demand and supply conditions depicted in Figure 9-2,

If the quantity supplied of euro were greater than the quantity demanded, then the price of the

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

Which of the following will most likely result from an unexpected increase in prices that decreases real wages and resource prices?

If the real interest rate in the domestic loanable funds market increases,

If the expected inflation rate is 3 percent and banks charge a 10 percent money rate of interest, the real rate of interest is

As prices rise, consumers and businesses will want to hold larger money balances. This will lead to

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.

The supply of resources, level of technology, and the quality of an economy's institutional arrangements provide the constraint that determines the shape of the

If prices in the United States rose, which of the following could be directly attributed to the international substitution effect?

Which of the following is a correct statement?

If the dollar price of the English pound goes from $1.30 to $1.10, the dollar has

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

Imagine that there are only two nations in the world, the United States and Mexico. If Americans buy more goods made in Mexico, other things constant, the

Once decision makers fully adjust to an increase in prices,

If the actual price level exceeds the expected price level reflected in long-term contracts,

If the money interest rate is 7 percent and the inflationary premium 4 percent, the real interest rate is

In the loanable funds market, the price that borrowers must pay for earlier availability is the

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

Special Topics

Filters

Exam 9: An Introduction to Basic Macroeconomic Markets

An appreciation in the U.S. dollar would

Use the figure below to answer the following question(s). Figure 9-2 When an economy is experiencing the aggregate demand and supply conditions depicted in Figure 9-2,

If the quantity supplied of euro were greater than the quantity demanded, then the price of the

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

Which of the following will most likely result from an unexpected increase in prices that decreases real wages and resource prices?

If the real interest rate in the domestic loanable funds market increases,

If the expected inflation rate is 3 percent and banks charge a 10 percent money rate of interest, the real rate of interest is

As prices rise, consumers and businesses will want to hold larger money balances. This will lead to

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.

The supply of resources, level of technology, and the quality of an economy's institutional arrangements provide the constraint that determines the shape of the

If prices in the United States rose, which of the following could be directly attributed to the international substitution effect?

Which of the following is a correct statement?

If the dollar price of the English pound goes from $1.30 to $1.10, the dollar has

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

Imagine that there are only two nations in the world, the United States and Mexico. If Americans buy more goods made in Mexico, other things constant, the

Once decision makers fully adjust to an increase in prices,

If the actual price level exceeds the expected price level reflected in long-term contracts,

If the money interest rate is 7 percent and the inflationary premium 4 percent, the real interest rate is

In the loanable funds market, the price that borrowers must pay for earlier availability is the

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

Special Topics

Filters