Question 1

If the dollar price of the English pound goes from $1.50 to $1.75,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 2

The difference between the money rate of interest and the real rate of interest is often called the

Accepted Answer

A) real balance effect. 
B) prime interest rate. 
C) inflationary premium. 
D) discount rate. 
A) real balance effect. 
B) prime interest rate. 
C) inflationary premium. 
D) discount rate.

Question 3

Gladys agrees to lend Kay $1,000 for one year at a nominal rate of interest of 5 percent.At the end of the year prices have actually risen by 7 percent.Gladys earned a real rate of return of

Accepted Answer

A) Negative 2%. 
B) 2%. 
C) 5%. 
D) 7%. 
A) Negative 2%. 
B) 2%. 
C) 5%. 
D) 7%.

Question 4

Suppose people anticipate that inflation will be 4 percent during the next several years.If the real rate of interest is 5 percent,the money rate of interest must be

Accepted Answer

A) 1 percent. 
B) 4 percent. 
C) 5 percent. 
D) 9 percent. 
A) 1 percent. 
B) 4 percent. 
C) 5 percent. 
D) 9 percent.

Question 5

Which of the following is true?

Accepted Answer

A) The long-run aggregate supply curve slopes upward to the right. 
B) The aggregate quantity demanded of goods and services slopes downward to the right because it is simply the sum of the demand curves for each individual product. 
C) An unanticipated increase in demand will increase prices and improve profit margins in the goods and services market,leading firms to expand output. 
D) An anticipated increase in demand will lead to higher resource prices,which will cause firms to expand their output. 
A) The long-run aggregate supply curve slopes upward to the right. 
B) The aggregate quantity demanded of goods and services slopes downward to the right because it is simply the sum of the demand curves for each individual product. 
C) An unanticipated increase in demand will increase prices and improve profit margins in the goods and services market,leading firms to expand output. 
D) An anticipated increase in demand will lead to higher resource prices,which will cause firms to expand their output.

Question 6

The price that a person must pay in order acquire purchasing power now rather than in the future is called

Accepted Answer

A) the interest rate. 
B) the foreign exchange rate. 
C) the inflationary premium. 
D) the risk premium. 
A) the interest rate. 
B) the foreign exchange rate. 
C) the inflationary premium. 
D) the risk premium.

Question 7

If a reform of the tax laws encourages greater saving,the result would be

Accepted Answer

A) higher interest rates and greater investment. 
B) higher interest rates and less investment. 
C) lower interest rates and greater investment. 
D) lower interest rate and less investment. 
A) higher interest rates and greater investment. 
B) higher interest rates and less investment. 
C) lower interest rates and greater investment. 
D) lower interest rate and less investment.

Question 8

If there is shortage of loanable funds,then

Accepted Answer

A) the supply for loanable funds shifts right and the demand shifts left. 
B) the supply for loanable funds shifts left and the demand shifts right. 
C) neither curve shifts,but the quantity of loanable funds supplied increases and the quantity demanded decreases as the interest rate rises to equilibrium. 
D) neither curve shifts,but the quantity of loanable funds supplied decreases and the quantity demanded increases as the interest rate falls to equilibrium. 
A) the supply for loanable funds shifts right and the demand shifts left. 
B) the supply for loanable funds shifts left and the demand shifts right. 
C) neither curve shifts,but the quantity of loanable funds supplied increases and the quantity demanded decreases as the interest rate rises to equilibrium. 
D) neither curve shifts,but the quantity of loanable funds supplied decreases and the quantity demanded increases as the interest rate falls to equilibrium.

Question 9

Other things the same,an increase in the price level makes the dollars people hold worth

Accepted Answer

A) more,so they are willing to spend more. 
B) more,so they are willing to spend less. 
C) less,so they are willing to spend more. 
D) less,so they are willing to spend less. 
A) more,so they are willing to spend more. 
B) more,so they are willing to spend less. 
C) less,so they are willing to spend more. 
D) less,so they are willing to spend less.

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

When the loanable funds and foreign exchange markets are in equilibrium,

Accepted Answer

A) there are no leakages from the circular flow of income. 
B) macro equilibrium cannot occur. 
C) the leakages from the circular flow will equal the injections into it. 
D) injections into the circular flow will exceed leakages from it. 
A) there are no leakages from the circular flow of income. 
B) macro equilibrium cannot occur. 
C) the leakages from the circular flow will equal the injections into it. 
D) injections into the circular flow will exceed leakages from it.

Question 12

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 13

Within the framework of the AS/AD model,which of the following is a true statement regarding short-run aggregate supply?

Accepted Answer

A) An increase in prices temporarily improves profit margins because important components of costs are fixed in the short run. 
B) An increase in prices leads to higher interest rates,which temporarily improves profit margins. 
C) An increase in prices leads to an expansion in the money supply,which stimulates additional output. 
D) An increase in prices increases real wage rates and thereby expands the size of the economy's resource base. 
A) An increase in prices temporarily improves profit margins because important components of costs are fixed in the short run. 
B) An increase in prices leads to higher interest rates,which temporarily improves profit margins. 
C) An increase in prices leads to an expansion in the money supply,which stimulates additional output. 
D) An increase in prices increases real wage rates and thereby expands the size of the economy's resource base.

Question 14

Which of the following events would cause the interest rate to rise?

Accepted Answer

A) a decrease in the demand for loanable funds 
B) an increase in the demand for loanable funds 
C) an increase in the supply for loanable funds 
D) a decrease in aggregate demand 
A) a decrease in the demand for loanable funds 
B) an increase in the demand for loanable funds 
C) an increase in the supply for loanable funds 
D) a decrease in aggregate demand

Question 15

Which of the following is the most accurate statement about real and nominal interest rates?

Accepted Answer

A) Real interest rates can be either positive or negative,but nominal interest rates must be positive. 
B) Real interest rates and nominal interest rates must be positive. 
C) Real interest rates must be positive,but nominal interest rates can be either positive or negative. 
D) Real interest rates and nominal interest rates can be either positive or negative. 
A) Real interest rates can be either positive or negative,but nominal interest rates must be positive. 
B) Real interest rates and nominal interest rates must be positive. 
C) Real interest rates must be positive,but nominal interest rates can be either positive or negative. 
D) Real interest rates and nominal interest rates can be either positive or negative.

Question 16

If equilibrium is present in the foreign exchange market and a nation is experiencing a trade surplus,

Accepted Answer

A) the nation must be experiencing a net capital inflow. 
B) the nation must be experiencing a net capital outflow. 
C) the nation's inflation rate must increase. 
D) the nation's interest rate must increase. 
A) the nation must be experiencing a net capital inflow. 
B) the nation must be experiencing a net capital outflow. 
C) the nation's inflation rate must increase. 
D) the nation's interest rate must increase.

Question 17

Ceteris paribus,a decrease in the U.S.price level will cause

Accepted Answer

A) an increase in U.S.exports. 
B) an increase in U.S.imports. 
C) the aggregate demand curve to shift to the right. 
D) the aggregate demand curve to shift to the left. 
A) an increase in U.S.exports. 
B) an increase in U.S.imports. 
C) the aggregate demand curve to shift to the right. 
D) the aggregate demand curve to shift to the left.

Question 18

If the foreign exchange market is in equilibrium and attractive domestic investment opportunities result in a net inflow of capital,

Accepted Answer

A) the nation will experience a trade deficit. 
B) the nation will experience a trade surplus. 
C) interest rates will rise in the loanable funds market. 
D) the actual rate of unemployment must exceed the natural rate of unemployment. 
A) the nation will experience a trade deficit. 
B) the nation will experience a trade surplus. 
C) interest rates will rise in the loanable funds market. 
D) the actual rate of unemployment must exceed the natural rate of unemployment.

Question 19

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

Accepted Answer

A) make U.S.exports more expensive to foreigners. 
B) make imports less expensive for U.S.consumers. 
C) make U.S.exports cheaper for foreign consumers. 
D) encourage U.S.consumers to travel abroad. 
A) make U.S.exports more expensive to foreigners. 
B) make imports less expensive for U.S.consumers. 
C) make U.S.exports cheaper for foreign consumers. 
D) encourage U.S.consumers to travel abroad.

Question 20

If expected inflation is constant and the nominal interest rate increased 3 percentage points,the real interest rate would

Accepted Answer

A) increase 3 percentage points. 
B) increase,but by less than 3 percentage points. 
C) decrease,but by less than 3 percentage points. 
D) decrease by 3 percentage points. 
A) increase 3 percentage points. 
B) increase,but by less than 3 percentage points. 
C) decrease,but by less than 3 percentage points. 
D) decrease by 3 percentage points.

Exam 9: Aan Introduction to Basic Macroeconomic Markets

If the dollar price of the English pound goes from $1.50 to $1.75,the dollar has

The difference between the money rate of interest and the real rate of interest is often called the

Gladys agrees to lend Kay $1,000 for one year at a nominal rate of interest of 5 percent.At the end of the year prices have actually risen by 7 percent.Gladys earned a real rate of return of

Suppose people anticipate that inflation will be 4 percent during the next several years.If the real rate of interest is 5 percent,the money rate of interest must be

Which of the following is true?

The price that a person must pay in order acquire purchasing power now rather than in the future is called

If a reform of the tax laws encourages greater saving,the result would be

If there is shortage of loanable funds,then

Other things the same,an increase in the price level makes the dollars people hold worth

An appreciation in the U.S.dollar would

When the loanable funds and foreign exchange markets are in equilibrium,

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

Within the framework of the AS/AD model,which of the following is a true statement regarding short-run aggregate supply?

Which of the following events would cause the interest rate to rise?

Which of the following is the most accurate statement about real and nominal interest rates?

If equilibrium is present in the foreign exchange market and a nation is experiencing a trade surplus,

Ceteris paribus,a decrease in the U.S.price level will cause

If the foreign exchange market is in equilibrium and attractive domestic investment opportunities result in a net inflow of capital,

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

If expected inflation is constant and the nominal interest rate increased 3 percentage points,the real interest rate would

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

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

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney 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

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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