QuestionQuestion • Question 1 • Question 1

03 Jun QuestionQuestion • Question 1 • Question 1

QuestionQuestion
• Question 1

• Question 1

2 out of 2 points

In 2008 the U.S. budget deficit increased. According to the open-economy macroeconomic model

the interest rate and the real exchange rate should have risen.

the interest rate and the real exchange rate should have fallen.

the interest rate should have fallen and the real exchange rate should have risen.

the interest rate should have risen and the real exchange rate should have fallen.

• Question 2

2 out of 2 points

An increase in the interest rate increases the opportunity cost of holding money, so the quantity of money demanded falls.

• Question 3

2 out of 2 points

Under the assumptions of quantity theory, if the money supply increases by 3 percentage points which of the following increases by 3 percentage points?

the price level but not real GDP

neither real GDP nor the price level

real GDP but not the price level

real GDP and the price level

• Question 4

2 out of 2 points

During the financial crisis and recession of 2008-2009

unemployment and inflation were low

unemployment and inflation were high

unemployment was low and inflation was high

unemployment was high and inflation was low

• Question 5

2 out of 2 points

If the short-run aggregate supply curve were to shift left, prices and output would fall.

True

False

• Question 6

2 out of 2 points

If consumers and businesses became more pessimistic about the future of the economy, the government could try to stabilize output by

decreasing government expenditures. The primary objection to this is that an increase in government expenditures has no impact on the economy.

decreasing government expenditures. The primary objection to this is that there are lags in implementing fiscal policy.

increasing government expenditures. The primary objection to this is that an increase in government expenditures has no impact on the economy.

increasing government expenditures. The primary objection to this is that there are lags in implementing fiscal policy.

• Question 7

2 out of 2 points

The long-run Phillips curve implies that monetary policy influences nominal but not real variables.

: True

False

• Question 8

2 out of 2 points

When the Fed announces a target for the federal funds rate it essentially accommodates the day-to-day shifts in money demand by adjusting the money supply accordingly.

True

False

• Question 9

2 out of 2 points

According to rational expectations if the government made a credible commitment to a policy of low inflation, people would be rational enough to lower their expectations of inflation immediately. The short run Phillips curve would shift downward and the economy would reach low inflation quickly.

True

False

• Question 10

2 out of 2 points

During recessions

unemployment falls and a decline in consumption accounts for the majority of the decline in output.

unemployment rises and a decline in consumption accounts for the majority of the decline in output.

unemployment rises and a decline in investment accounts for the majority of the decline in output.

unemployment falls and a decline in investment accounts for the majority of the decline in output.

• Question 11

2 out of 2 points

If the U.S. put an import quota on refrigerators, it would

raise U.S. net exports of refrigerators and raise net exports of other U.S. goods.

lower U.S. net exports of refrigerators and lower net exports of other U.S. goods.

lower U.S. net exports of refrigerators and raise net exports of other U.S. goods.

raise U.S. net exports of refrigerators and lower net exports of other U.S. goods.

• Question 12

2 out of 2 points

If the U.S. were to impose an import quota on CD players

net exports and the exchange rate would rise.

net exports and the exchange rate would be unchanged.

net exports would be unchanged and the exchange rate would rise.

net exports would rise and the exchange rate would be unchanged.

• Question 13

2 out of 2 points

If aggregate demand shifts right farther than expected, then

inflation is lower than expected and unemployment rises.

inflation is higher than expected and unemployment falls.

inflation is lower than expected and unemployment falls.

inflation is higher than expected and unemployment rises.

• Question 14

2 out of 2 points

The demand curve for dollars in the market for foreign-currency exchange is based on the logic that a decrease in the exchange rate makes

domestic goods more expensive relative to foreign goods so net exports rise.

purchasing assets from abroad less attractive so net capital outflow rises.

purchasing assets from abroad more attractive so net capital outflow rises.

domestic goods less expensive relative to foreign goods so net exports rise.

• Question 15

2 out of 2 points

If Americans decided to save a larger fraction of their income, the interest rate would fall and the dollar would depreciate.

True

False

• Question 16

2 out of 2 points

An open economy can only finance its investment purchases with domestic saving.

True

False

• Question 17

2 out of 2 points

National saving is the source of the supply of loanable funds in the open-economy macroeconomic model.

True

False

• Question 18

2 out of 2 points

Other things the same, if the U.S. dollar appreciates, then U.S. goods become

cheaper relative to foreign goods, so U.S. net exports decrease.

more expensive relative to foreign goods, so U.S. net exports increase.

more expensive relative to foreign goods, so U.S. net exports decrease.

cheaper relative to foreign goods, so U.S. net exports increase.

• Question 19

2 out of 2 points

A mutual fund in China buys $100,000 of bonds sold by a U.S. corporation. This is an example of

foreign portfolio investment. By itself it reduces U.S. net capital outflow.

foreign direct investment. By itself it raises U.S. net capital outflow.

foreign portfolio investment. By itself it raises U.S. net capital outflow.

foreign direct investment. By itself it reduces U.S. net capital outflow.

• Question 20

2 out of 2 points

Money that has value as a good is called fiat money.

True

False

• Question 21

2 out of 2 points

Which of the following both decrease the money supply?

banks want to hold a larger share of deposits as excess reserves, households want to hold more currency relative to deposits

banks want to hold a smaller share of deposits as excess reserves, households want to hold less currency relative to deposits

banks want to hold a smaller share of deposits as excess reserves, households want to hold more currency relative to deposits

banks want to hold a larger share of deposits as excess reserves, households want to hold less currency relative to deposits

• Question 22

2 out of 2 points

According to the economist’s definition, money includes only the few types of wealth that are regularly accepted by sellers in exchange for goods and services.

True

False

• Question 23

2 out of 2 points

Which of the following best illustrates money’s use as a unit of account?

Loan repayments are given in terms of dollars.

Ann liquidates stocks.

Robert uses dollars to buy tickets for a concert.

• Question 24

2 out of 2 points

Net capital outflow equals net exports.

True

False

• Question 25

2 out of 2 points

At a price level below equilibrium people want to hold

less money than the Fed has created, so spending would rise.

less money than the Fed has created, so spending would fall.

more money than the Fed has created, so spending would fall.

more money than the Fed has created, so spending would rise.

• Question 26

2 out of 2 points

If some firms have sticky prices, and the price level raises more than had been anticipated, then in the short run those firms with sticky prices will have

an increase in customers and so increase production.

a decrease in customers and so reduce production.

a decrease in customers but will not change production.

an increase in customers but will not change production.

• Question 27

2 out of 2 points

If the government of a foreign country chooses to purchase large quantities of U.S. assets, which of the following happens?

the U.S. interest rate rises and the dollar appreciates

the U.S. interest rate falls and the dollar depreciates

the U.S. interest rate falls and the dollar appreciates

the U.S. interest rate rises and the dollar depreciates

• Question 28

2 out of 2 points

In the market for foreign currency-exchange an increase in the