Exam 9: An Introduction to Basic Macroeconomic Markets

Suppose that severe floods destroyed farms, homes, and businesses in the Midwest. Use the aggregate demand/aggregate supply model, to explain the changes you would expect to take place and the effects you would expect these floods to have on both output and prices. (Include both short-run and long-run effects.)

When the actual rate of unemployment is less than the natural rate of unemployment, the economy

If there is a surplus of loanable funds

The nominal (money) rate of interest

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

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

Which of the following will always be true when an economy is in long-run equilibrium?

In the short run, if prices were below equilibrium,

The "loanable funds market" is a term used by economists to describe the

If net exports are positive, then

If a nation's currency depreciates, this will tend to

Long-run equilibrium in the goods and services market requires that decision makers who agreed to long-term contracts must have

Which of the following best characterizes the circular flow of income?

The change in the aggregate quantity of goods and services demanded in the U.S. is based on the logic that as the price level falls,

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

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

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?

A depreciation in the U.S. dollar on the foreign exchange market will

Initially, the nominal rate of interest is 8 percent and inflation is 4 percent. The nominal interest rate then rises to 12 percent and the inflation rate to 8 percent. It follows that the real rate of interest has

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