Question 1

According to the quantity theory of money,

Accepted Answer

A)  the only way the Fed can change the quantity of money without affecting the velocity of circulation is by using open market operations. 
B)  a change in the discount rate changes real GDP. 
C)  a decrease in the quantity of money will decrease the velocity of circulation. 
D)  a decrease in the quantity of money will decrease the price level. D

Question 2

The opportunity cost of holding money is the

Accepted Answer

A)  price level. 
B)  real interest rate. 
C)  velocity of circulation. 
D)  nominal interest rate. D

Question 3

________ increases real GDP.

Accepted Answer

A)  A fall in the price level 
B)  An increase in employment 
C)  An increase in the natural rate of unemployment 
D)  A decrease in government spending B

Question 4

If the U.S.interest rate differential ________,the demand for dollars ________ and the U.S.exchange rate ________.

Accepted Answer

A)  increases; increase; appreciates 
B)  decreases; increase; appreciates 
C)  increases; decrease; depreciates 
D)  decreases; decreases; appreciates

Question 5

The main component of the current account is

Accepted Answer

A)  net exports. 
B)  investment both abroad and domestically. 
C)  net interest income. 
D)  the official settlements account.

Question 6

If two currencies allow for the equal value of money so that the same bundle of goods cost the same in two countries,there is

Accepted Answer

A)  trade equalization parity. 
B)  interest rate parity. 
C)  tariff application parity. 
D)  purchasing power parity.

Question 7

Purchasing new capital ________.

Accepted Answer

A)  creates an upward movement along the aggregate production function 
B)  creates a downward movement along the aggregate production function 
C)  shifts the aggregate production function upward 
D)  shifts the aggregate production function downward

Question 8

If the Fed makes an open market ________ of securities,in the quantity theory M ________ and V ________.

Accepted Answer

A)  purchase; increases; increases 
B)  sale; increases; decreases 
C)  purchase; does not change; does not change 
D)  sale; decreases; does not change

Question 9

The demand for labor ________ and the accumulated skill and knowledge of human is called ________.

Accepted Answer

A)  increases when productivity rises; technology 
B)  depends on the nominal wage rate; human capital 
C)  depends on the real wage rate; human capital 
D)  is independent of technology; the marginal product of labor

Question 10

In the foreign exchange market,if the supply of dollars ________ and simultaneously the demand for dollars ________,then the exchange rate definitely ________.

Accepted Answer

A)  increases; increases; depreciates 
B)  decreases; increases; depreciates 
C)  increases; decreases; depreciates 
D)  decreases; decreases; appreciates

Question 11

The velocity of circulation is

Accepted Answer

A)  equal to the price level multiplied by real GDP. 
B)  the same as the aggregate demand curve. 
C)  the average number of times a dollar bill is used in a year to buy the goods and services in GDP. 
D)  increased when the Fed lowers the required reserve ratio.

Question 12

The major component of the capital and finance account is

Accepted Answer

A)  net exports. 
B)  investment both abroad and domestically. 
C)  imports and exports of services. 
D)  the official settlements account.

Question 13

An increase in the population will ________ potential GDP,________ employment,and ________ the real wage.

Accepted Answer

A)  decrease; increase; raise 
B)  increase; increase; raise 
C)  increase; decrease; lower 
D)  increase; increase; lower

Question 14

An increase in the amount of capital leads to ________ the aggregate production function and a technological advance leads to ________ the aggregate production function.

Accepted Answer

A)  a movement along; a movement along 
B)  a movement along; an upward shift 
C)  an upward shift; an upward shift 
D)  a downward shift; an upward shift

Question 15

If the Fed hikes the U.S.interest rate relative to interest rates in other countries,in the foreign exchange market the demand for dollars will ________,the supply of dollars will ________,and the exchange rate will ________.

Accepted Answer

A)  increase; increase; rise 
B)  decrease; decrease; fall 
C)  increase; decrease; rise 
D)  decrease; increase; fall

Question 16

An increase in the productivity will ________ potential GDP,________ employment,and ________ the real wage.

Accepted Answer

A)  decrease; increase; raise 
B)  increase; increase; raise 
C)  increase; decrease; lower 
D)  increase; increase; lower

Question 17

When money is accepted as payment in a market transaction,it is functioning as

Accepted Answer

A)  a factor that shifts the aggregate production function 
B)  the velocity of circulation. 
C)  a medium of exchange. 
D)  the real interest rate.

Question 18

The ________ growth theory assumes that population growth is not driven by real GDP per person and the ________ growth theory predicts that differences in the economic growth rate can last indefinitely.

Accepted Answer

A)  new; classical 
B)  neoclassical; new 
C)  classical; neoclassical 
D)  neoclassical; neoclassical

Question 19

If productivity constantly increases,then the real wage rate ________ and employment ________.

Accepted Answer

A)  constantly rises; constantly increases 
B)  does not change; constantly decreases 
C)  constantly decreases; does not change 
D)  constantly rises; does not change

Exam 18: Macroeconomic Trends

According to the quantity theory of money,

The opportunity cost of holding money is the

________ increases real GDP.

If the U.S.interest rate differential ,the demand for dollars and the U.S.exchange rate .

The main component of the current account is

If two currencies allow for the equal value of money so that the same bundle of goods cost the same in two countries,there is

Purchasing new capital ________.

If the Fed makes an open market of securities,in the quantity theory M and V .

The demand for labor and the accumulated skill and knowledge of human is called .

In the foreign exchange market,if the supply of dollars and simultaneously the demand for dollars ,then the exchange rate definitely .

The velocity of circulation is

The major component of the capital and finance account is

An increase in the population will potential GDP, employment,and the real wage.

An increase in the amount of capital leads to the aggregate production function and a technological advance leads to the aggregate production function.

If the Fed hikes the U.S.interest rate relative to interest rates in other countries,in the foreign exchange market the demand for dollars will ,the supply of dollars will ,and the exchange rate will .

An increase in the productivity will potential GDP, employment,and the real wage.

When money is accepted as payment in a market transaction,it is functioning as

The growth theory assumes that population growth is not driven by real GDP per person and the growth theory predicts that differences in the economic growth rate can last indefinitely.

If productivity constantly increases,then the real wage rate and employment .