QN=33 Refer to Table 3-6. Assume that Hilda and Carlos each has 90 hours available.

Originally, each
(17738 person divided their time equally between the production of quilts and dresses. Now, each person
) spends all their time producing the good in which they have a comparative advantage. As a result,
the total output of dresses increased by
.

a. 3.5.
b. 4.5.
c. 5.5.
d. 9.0.

QN=5 Refer to Figure 3-7. The opportunity cost of 1 bowl for Juba is
(17761 .
)

a. 1/4 cup.
b. 2/3 cup.
c. 3/2 cups.
d. 4 cups.

QN=8 Refer to Figure 3-3. Enid has an absolute advantage in the production of
(17758 .
)

a. burritos and a comparative advantage in the production of tacos.

b. burritos and a comparative advantage in the production of burritos.
c. neither good and a comparative advantage in the production of tacos.
d. neither good and a comparative advantage in the production of burritos.

QN=47 (17787) The value of the housing services provided by the economy's owner-occupied houses
is..
a. included in GDP, and the estimated rental values of the houses are used to place a
value on these housing services.
b. included in GDP, and the actual mortgage payments made on the houses are used to
estimate the value of these rental services.
c. excluded from GDP since these services are not sold in any market.
d. excluded from GDP since the value of these housing services cannot be estimated with
any degree of precision.

QN=52 (17765) The consumption component of GDP includes spending on..

a. durable goods and nondurable goods, but not spending on services.
b. durable goods and services, but not spending on nondurable goods.
c. nondurable goods and services, but not spending on durable goods.
d. durable goods, nondurable goods, and services.
QN=58 Net exports equal..
(17790
)
a. exports plus imports.
b. exports minus imports.
c. imports minus exports.
d. GDP minus imports.
QN=51 Refer to Table 23-5. In 2007, Batterland’s nominal GDP was
(17770 .
)

a. $300.
b. $390.
c. $400.
d. $540.

QN=70 (17785) In the economy of Wrexington in 2008, nominal GDP was $20 billion and the GDP
deflator ratio was 500. What was Wrexington’s real GDP in 2008?..
a. $2.5 million
b. $10 million
c. $40 million
d. $100 million

QN=93 (17815) The CPI was 120 in 2000 and 132 in 2001. Dorgan borrowed money in 2000 and repaid
the loan in 2001. If the nominal interest rate on the loan was 12 percent, then the real
interest rate was..
a. 2 percent.
b. 10 percent.
c. 12 percent.
d. 22 percent.

QN=88 (17813) The price index was 120 in 2006 and 127.2 in 2007. What was the inflation rate?..
a. 5.7 percent
b. 6.0 percent
c. 7.2 percent
d. 27.2 percent

QN=82 (17796) Table 24-1

The table below pertains to Pieway, an economy in which the typical consumer’s
basket consists of 10 bushels of peaches and 15 bushels of pecans.

Refer to Table 24-1. If 2005 is the base year, then the CPI for 2005 was
.

a. 83.3.
b. 100.0.
c. 120.0.
d. 200.0.

QN=91 (17798) The consumer price index tries to gauge how much incomes must rise to maintain..
a. an increasing standard of living.
b. a constant standard of living.
c. a decreasing standard of living.
d. the highest standard of living possible.

QN=102 (17797) Arlo is offered a job in Des Moines, where the CPI is 60, and a job in New York, where
the CPI is 125. Arlo's job offer in Des Moines is for $48,000. How much does the New
York job have to pay in order for the two salaries to represent the same purchasing
power?..
a. $23,040
b. $52,000
c. $79,200
d. $100,000

QN=114 (17824) An understanding of the best ways to produce goods and services is called..
a. human capital.
b. physical capital.
c. technology.
d. productivity.

QN=119 (17826) In a market economy, we know that a resource has become scarcer when..
a. both the demand for the good and the supply of the good have increased.
b. both the demand for the good and the supply of the good have decreased.
c. the demand for the good has increased and the supply has decreased.
d. the demand for the good has decreased and the supply has remained constant.

QN=112 (17821) Over the past 100 years, U.S. real GDP per person has doubled about every 35 years. If,
in the next 100 years, it doubles every 25 years, then a century from now U.S. real GDP
per person will be..
a. 4 times higher than it is now.
b. 8 times higher than it is now.
c. 12 times higher than it is now.
d. 16 times higher than it is now.

QN=113 (17832) In the past there have been violent protests against the World Bank and the World
Trade Organization. The protesters argued that these institutions promote free trade
and also encourage corporations in rich countries to invest in poor countries. The
protesters contended that these practices make rich countries richer and poor
countries poorer. An economist would..
a. disagree with the protesters because these practices will help make both rich and poor
countries richer.
b. disagree with the protesters about free trade, but would agree with the protesters
about corporate investment.
c. disagree with the protesters about corporate investment, but would agree with the
protesters about free trade.
d. agree with the protesters.

QN=107 (17839) The level of real GDP person..

a. differs widely across countries, but the growth rate of real GDP per person is similar
across countries.
b. is very similar across countries, but the growth rate of real GDP per person differs
widely across countries.
c. and the growth rate of real GDP per person are similar across countries.
d. and the growth rate of real GDP per person vary widely across countries.
QN=147 (17849) Which of the following is not always correct for a closed economy?..
a. National saving equals private saving plus public saving.
b. Net exports equal zero.
c. Real GDP measures both income and expenditures.
d. Private saving equals investment.

QN=150 (17855) If the government's expenditures exceeded its receipts, it would likely.
a. lend money to a bank or other financial intermediary.
b. borrow money from a bank or other financial intermediary.
c. buy bonds directly from the public.
d. sell bonds directly to the public.

QN=152 (17851) For a closed economy, GDP is $11 trillion, consumption is $7 trillion, taxes are $2
trillion and the government runs a deficit of $1 trillion. What are private saving and
national saving?.
a. $4 trillion and $1 trillion, respectively
b. $4 trillion and $-1 trillion, respectively
c. $2 trillion and $1 trillion, respectively
d. $2 trillion and $-1 trillion, respectively

QN=139 (17853) The source of the supply of loanable funds is..

a. saving, and the source of the demand for loanable funds is investment.
b. consumption, and the source of the demand for loanable funds is investment.
c. investment, and the source of the demand for loanable funds is saving.
d. the interest rate, and the source of the demand for loanable funds is saving.

QN=138 (17856) In examining the national income accounts of the closed economy of Nepotocracy you
see that this year it had taxes of $100 billion, government transfers of $40 billion, and
government purchases of goods and services of $80 billion. You also notice that last
year it had private saving of $50 billion and investment of $70 billion. In which year did
Nepotocracy have a budget deficit of $20 billion?..
a. this year and last year
b. this year but not last year
c. last year but not this year
d. neither this year nor last year

QN=161 (17882) Suppose that efficiency wages become more common in the economy. Economists
would predict that this would..
a. increase the quantity demanded and decrease the quantity supplied of labor, thereby
decreasing the natural rate of unemployment.
b. decrease the quantity demanded and increase the quantity supplied of labor, thereby
increasing the natural rate of unemployment.
c. increase the quantity demanded and decrease the quantity supplied of labor, thereby
 increasing the natural rate of unemployment.
d. decrease the quantity demanded and increase the quantity supplied of labor, thereby
decreasing the natural rate of unemployment.

QN=166 (17896) 1. If all workers and all jobs were the same such that all workers were equally
well suited for all jobs, then there would be no..
a. cyclical unemployment.
b. frictional unemployment.
c. natural rate of unemployment.
d. structural unemployment.

QN=179 (17889) Unemployment that results because the number of jobs available in some labor
markets may be insufficient to give a job to everyone who wants one is called..
a. the natural rate of unemployment.
b. cyclical unemployment.
c. structural unemployment.
d. frictional unemployment.

QN=167 (17894) Unions contribute to..

a. structural unemployment but not the natural rate of unemployment.
b. the natural rate of unemployment but not structural unemployment.
c. both structural unemployment and the natural rate of unemployment.
d. neither structural unemployment nor the natural rate of unemployment.

QN=174 (17877) Which of the following causes of unemployment is associated with a wage rate above
the market equilibrium level?..
a. (i) minimum-wage laws
b. (ii) unions
c. (iii) efficiency wages
d. All of (i), (ii), and (iii) are correct.

QN=168 (17881) The labor force equals the..

a. number of people employed.
b. number of people unemployed.
c. number of people employed plus the number of people unemployed.
d. adult population.

QN=210 (17903) In a system of 100-percent-reserve banking, the purpose of a bank is to.

a. make loans to households.
b. influence the money supply.
c. give depositors a safe place to keep their money.
d. buy and sell gold.
QN=203 (17920) If an economy used gold as money, its money would be..
a. commodity money, but not fiat money.
b. fiat money, but not commodity money.
c. both fiat and commodity money.
d. functioning as a store of value and as a unit of account, but not as a medium of
exchange.

QN=193 (17918) If people decide to hold more currency relative to deposits, the money supply..
a. falls. The larger the reserve ratio is, the more the money supply falls.
b. falls. The larger the reserve ratio is, the less the money supply falls.
c. rises. The larger the reserve ratio is, the more the money supply rises.
d. rises. The larger the reserve ratio is, the less the money supply rises.

QN=219 (17936) According to the quantity theory of money, a 2 percent increase in the money supply.
a. causes the price level to fall by 2 percent.
b. leaves the price level unchanged.
c. causes the price level to rise by less than 2 percent.
d. causes the price level to rise by 2 percent.

QN=23 Refer to Figure 30-3. Suppose the relevant money-supply curve is the one labeled MS2; also
2 suppose the economy’s real GDP is 45,000 for the year. If the money market is in equilibrium, then
(17931 the velocity of money is approximately
) .
a. 4.5
b. 6.0
c. 9.0
d. 12.0

QN=212 (17955) Refer to Figure 30-1. If the money supply is MS2 and the value of money is 2, then
.

a. the value of money is lower than its equilibrium level.

b. the price level is higher than its equilibrium level.
c. the quantity of money demanded is greater than the quantity of money supplied.
d. the quantity of money supplied is greater than the quantity of money demanded.

QN=215 (17956) Suppose each good costs $5 per unit and Megan holds $40. What is the real value of
the money she holds?..
a. $40. If the price of goods rises, to maintain the real value of her money holdings she
needs to hold more dollars.
b. 8 units of goods. If the price of goods rises, to maintain the real value of her money
holdings she needs to hold more dollars.
c. $40. If the price of goods rises, to maintain the real value of her money holdings she
needs to hold fewer dollars.
d. 8 units of goods. If the price of goods rises, to maintain the real value of her money
holdings she needs to hold fewer dollars.

QN=241 (17939) Suppose one year ago the price index was 120 and Mark purchased $20,000 worth of
bonds. One year later the price index is 126. Mark redeems his bonds for $22,250 and
is in a 40 percent tax bracket. What is Mark’s real after-tax rate of interest to the
nearest tenth of a percent?.
a. 4.3 percent
b. 3.1 percent
c. 1.8 percent
d. 1.2 percent

QN=236 (17945) The term hyperinflation refers to..

a. the spread of inflation from one country to others.
b. a decrease in the inflation rate.
c. a period of very high inflation.
d. inflation accompanied by a recession.

QN=262 (17963) If the exchange rate is 50 Bangladesh taka per dollar and a bushel of rice costs 180
taka in Bangladesh and $3 in the United States, then the real exchange rate of the US
dollar is..
a. greater than one and arbitrageurs could profit by buying rice in the United States and
selling it in Bangladesh.
b. greater than one and arbitrageurs could profit by buying rice in Bangladesh and selling
it in the United States.
c. less than one and arbitrageurs could profit by buying rice in the United States and
selling it in Bangladesh.
d. less than one and arbitrageurs could profit by buying rice in Bangladesh and selling it in
the United States.

QN=248 (17976) Suppose that the real exchange rate between the United States and Vietnam is defined
 in terms of baskets of goods. Other things the same, which of the following will
increase the real exchange rate (that is increase the number of baskets of Vietnamese
goods a basket of U.S. goods buys)?.
a. (i) an increase in the quantity of Vietnamese currency that can be purchased with a
dollar
b. (ii) an increase in the price of U.S. baskets of goods
c. (iii) a decrease in the price in Vietnamese currency of Vietnamese goods
d. All of (i), (ii), and (iii) are correct.

QN=260 (17959) One year a country has negative net exports. The next year it still has negative net
exports and imports have risen more than exports...
a. its trade surplus fell.
b. its trade surplus rose.
c. its trade deficit fell.
d. its trade deficit rose

QN=294 (17995) In the open-economy macroeconomic model, if the supply of loanable funds increases,
then the interest rate.
a. income
b. tastes
c. Price
d. Expectations

QN=300 (18027) At a given price level, an increase in which of the following shifts aggregate demand to
the right?.
a. (i) consumption
b. (ii) investment
c. (iii) government expenditures
d. All of (i), (ii), and (iii) are correct.

QN=309 (18017) The model of short-run economic fluctuations focuses on the price level and.
a. (i) real GDP.
b. (ii) economic growth.
c. (iii) the neutrality of money.
d. None of (i), (ii), and (iii) is correct.

QN=310 (18034) The long-run aggregate supply curve would shift right if immigration from abroad..
a. increased or Congress made a substantial increase in the minimum wage.
b. decreased or Congress abolished the minimum wage.
c. increased or Congress abolished the minimum wage.
d. decreased or Congress made a substantial increase in the minimum wage.
QN=343 (18046) In the long run, changes in the money supply affect.
a. (i) prices.
b. (ii) output.
c. (iii) unemployment rates.
d. All of (i), (ii), and (iii).

QN=341 (18055) The economy is in long-run equilibrium. Suppose that automatic teller machines
become cheaper and more convenient to use, and as a result the demand for money
falls. Other things equal, we would expect that, in the short run,..
a. the price level and real GDP would rise, but in the long run they would both be
unaffected.
b. the price level and real GDP would rise, but in the long run the price level would rise
and real GDP would be unaffected.
c. the price level and real GDP would fall, but in the long run they would both be
unaffected.
d. the price level and real GDP would fall, but in the long run the price level would fall
and real GDP would be unaffected.

QN=341 (18055) The economy is in long-run equilibrium. Suppose that automatic teller machines
become cheaper and more convenient to use, and as a result the demand for money
falls. Other things equal, we would expect that, in the short run,..
a. the price level and real GDP would rise, but in the long run they would both be
unaffected.
b. the price level and real GDP would rise, but in the long run the price level would rise
and real GDP would be unaffected.
c. the price level and real GDP would fall, but in the long run they would both be
unaffected.
d. the price level and real GDP would fall, but in the long run the price level would fall
and real GDP would be unaffected.

QN=36 Refer to Figure 3-4. The opportunity cost of 1 novel for Jordan is
(17741 .
)
a. 1/3 poem.
b. 3 poems.
c. 4 poems.
d. 12 poems.

QN=42 (17721) The opportunity cost of an item is..

a. the number of hours that one must work in order to buy one unit of the item.
b. what you give up to get that item.
c. always less than the dollar value of the item.
d. always greater than the cost of producing the item.

QN=6 (17718) People who provide you with goods and services..
a. are acting out of generosity.
b. do so because they get something in return.
c. have chosen not to become interdependent.
d. are required to do so by the government.

QN=70 (17785) In the economy of Wrexington in 2008, nominal GDP was $20 billion and the GDP
deflator ratio was 500. What was Wrexington’s real GDP in 2008?..
a. $2.5 million
b. $10 million
c. $40 million
d. $100 million

QN=71 Refer to Table 23-6. Which of the following is not correct?

(17766 .
)

a. This economy experienced growth from 1974 to 1975.

b. This economy experienced growth from 1975 to 1976.
c. This economy experienced growth from 1976 to 1977.
d. This economy experienced inflation from 1974 to 1975, from 1975 to 1976, and from 1976 to 1977.

QN=49 (17764) Gross domestic product is defined as..

a. (i) the quantity of all final goods and services demanded within a country in a given
period of time.
b. (ii) the quantity of all final goods and services supplied within a country in a given
period of time.
c. (iii) the market value of all final goods and services produced within a country in a
given period of time.
d. Both (i) and (ii) are correct.

QN=64 (17762) Macroeconomists study..

a. the decisions of households and firms.
b. the interaction between households and firms.
c. economy-wide phenomena.
d. regulations on firms and unions.

QN=66 (17774) Household spending on education is counted in which component or subcomponent of

GDP?..
a. consumption of durable goods
b. consumption of nondurable goods
c. consumption of services
d. investment

QN=99 (17819) Scenario 24-3

Grant Gant was a doctor in 1944 and earned $12,000 that year. His daughter, Gretta
Gant, is a doctor today and she earned $210,000 in 2005. The price index was 17.6 in
 1944 and 184 in 2005.

Refer to Scenario 24-3. Grant Gant’s 1944 income in 2005 dollars is..
a. $1,147.83.
b. $113,454.55.
c. $125,454.55.
d. $1,996,800.00.

QN=75 (17802) Suppose a basket of goods and services has been selected to calculate the CPI and
2002 has been selected as the base year. In 2002, the basket’s cost was $50; in 2004,
the basket’s cost was $52; and in 2006, the basket’s cost was $54.60. The value of the
CPI in 2004 was.
a. 96.2.
b. 102.0.
c. 104.0.
d. 152.0.

QN=77 (17800) In 1949, Sycamore, Illinois built a hospital for about $500,000. In 1987, the county
restored the courthouse for about $1.7 million. A price index for nonresidential
construction was 24 in 1949, 108 in 1987, and 126.5 in 2000. According to these
numbers, the hospital cost about..
a. $2.1 million in 2000 dollars, which is less than the cost of the courthouse restoration in
2000 dollars.
b. $2.1 million in 2000 dollars, which is more than the cost of the courthouse restoration
in 2000 dollars.
c. $2.6 million in 2000 dollars, which is less than the cost of the courthouse restoration in
2000 dollars.
d. $2.6 million in 2000 dollars, which is more than the cost of the courthouse restoration
in 2000 dollars.

QN=85 (17805) Economists use the term inflation to describe a situation in which..
a. some prices are rising faster than others.
b. the economy's overall price level is rising.
c. the economy's overall price level is high, but not necessarily rising.
d. the economy's overall output of goods and services is rising faster than the economy's
overall price level.

QN=80 (17799) The economy's inflation rate is the.

a. price level in the current period.
b. absolute change in the price level from the previous period.
c. change in the gross domestic product from the previous period.
d. percentage change in the price level from the previous period.
QN=114 (17824) An understanding of the best ways to produce goods and services is called..
a. human capital.
b. physical capital.
c. technology.
d. productivity.

QN=105 (17831) On a production function, as capital per worker increases, output per worker..
a. increases. This increase is larger at larger values of capital per worker.
b. increases. This increase is smaller at larger values of capital per worker.
c. decreases. This decrease is larger at larger value of capital per worker.
d. decreases. This decrease is smaller at larger value of capital per worker.

QN=120 (17847) Scenario 25-1.

An economy’s production form takes the form Y = AF(L, K, H, N)

Refer to Scenario 25-1. If the production function has the constant-returns-to-scale

property, and output is zero whenever some input is zero, then it is possible that the
specific form of the production function is..
a. Y = 4L + 2K + 3H + N
b. Y = (L + K + H + N)/4
c. Y =2(LKHN)^0.25
d. Y = 4(L^3 × K^4 × H × N)^0.5

QN=126 (17848) Given that a country’s real output has increased, in which of the following cases can
we be sure that its productivity also has increased?..
a. (i) The total number of hours worked rose.
b. (ii) The total number of hours worked stayed the same.
c. (iii) The total number of hours worked fell.
d. Both (ii) and (iii) are correct.

QN=112 (17821) Over the past 100 years, U.S. real GDP per person has doubled about every 35 years. If,
in the next 100 years, it doubles every 25 years, then a century from now U.S. real GDP
per person will be..
a. 4 times higher than it is now.
b. 8 times higher than it is now.
c. 12 times higher than it is now.
d. 16 times higher than it is now.

QN=150 (17855) If the government's expenditures exceeded its receipts, it would likely.
a. lend money to a bank or other financial intermediary.
b. borrow money from a bank or other financial intermediary.
c. buy bonds directly from the public.
d. sell bonds directly to the public.
QN=147 (17849) Which of the following is not always correct for a closed economy?..
a. National saving equals private saving plus public saving.
b. Net exports equal zero.
c. Real GDP measures both income and expenditures.
d. Private saving equals investment.

QN=15 Figure 26-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-
1 funds curves.
(17867
)
Refer to Figure 26-3. A shift of the demand curve from D1 to D2 is called
.

a. an increase in the demand for loanable funds, and that increase would originate from people who
had some extra income they wanted to lend.
b. an increase in the demand for loanable funds, and that increase would originate from households
and firms who wish to borrow to make investments.
c. a decrease in the demand for loanable funds, and that decrease would originate from people who
had some extra income they wanted to lend.
d. a decrease in the demand for loanable funds, and that decrease would originate from households
and firms who wish to borrow to make investments.

QN=15 Refer to Table 26-1. What was Hershey's earnings per share?
3 .
(17857
)

a. $38
b. $1.64
c. $1.31
d. $0.61

QN=141 (17858) If the nominal interest rate is 6 percent and the real interest rate is 2 percent, then
what is the inflation rate?.
a. (i) 8 percent
b. (ii) 4 percent
c. (iii) 3 percent
d. None of (i), (ii), and (iii) is correct.

QN=165 (17886) The natural rate of unemployment..

a. (i) arises from a single problem that has a single solution.
b. (ii) is easy for policymakers to reduce.
c. (iii) Both (i) and (ii) are correct.
d. None of (i), (ii), and (iii) is correct.

QN=157 (17885) Suppose some country had an adult population of about 50 million, a labor-force
participation rate of 60 percent, and an unemployment rate of 5 percent. How many
people were unemployed?..
a. 1.425 million
b. 1.5 million
c. 2.5 million
d. 5 million

QN=180 (17888) The efficiency-wage theory of worker health is..

a. more relevant for explaining unemployment in less developed countries than in rich
countries.
b. more relevant for explaining unemployment in rich countries than in less developed
countries.
c. equally relevant for explaining unemployment in less developed countries and in rich
countries.
d. not relevant for explaining unemployment.
QN=179 (17889) Unemployment that results because the number of jobs available in some labor
markets may be insufficient to give a job to everyone who wants one is called..
a. the natural rate of unemployment.
b. cyclical unemployment.
c. structural unemployment.
d. frictional unemployment.

QN=167 (17894) Unions contribute to..

a. structural unemployment but not the natural rate of unemployment.
b. the natural rate of unemployment but not structural unemployment.
c. both structural unemployment and the natural rate of unemployment.
d. neither structural unemployment nor the natural rate of unemployment.

QN=170 (17887) Suppose some country had an adult population of about 25 million, a labor-force
participation rate of 60 percent, and an unemployment rate of 6 percent. How many
people were unemployed?..
a. 0.846 million
b. 0.9 million
c. 1.5 million
d. 6 million

QN=186 (17919) Which list ranks assets from most to least liquid?..
a. currency, fine art, stocks
b. currency, stocks, fine art
c. fine art, currency, stocks
d. fine art, stocks, currency

QN=187 (17910) Credit cards..

a. defer payments.
b. are a store of value.
c. have led to wider use of currency.
d. are part of the money supply.

QN=234 (17938) If M = 3,000, P = 2, and Y = 12,000, what is velocity?..

a. 1/2
b. 2
c. 4
d. 8

QN=226 (17949) Given a nominal interest rate of 6 percent, in which of the following cases would you
earn the highest after-tax real rate of interest?.
a. (i) Inflation is 2.5 percent; the tax rate is 25 percent.
b. (ii) Inflation is 3 percent; the tax rate is 20 percent.
c. (iii) Inflation is 2 percent; the tax rate is 30 percent.
d. The after-tax real interest rate is the same for all of (i), (ii) and (iii).

QN=219 (17936) According to the quantity theory of money, a 2 percent increase in the money supply.
a. causes the price level to fall by 2 percent.
b. leaves the price level unchanged.
c. causes the price level to rise by less than 2 percent.
d. causes the price level to rise by 2 percent.

QN=224 (17954) An increase in the price level makes the value of money.
a. increase, so people want to hold more of it.
b. increase, so people want to hold less of it.
c. decrease, so people want to hold more of it.
d. decrease, so people want to hold less of it.

QN=237 (17950) Tara deposits money into an account with a nominal interest rate of 6 percent. She
expects inflation to be 2 percent. Her tax rate is 20 percent. Tara’s after-tax real rate
of interest.
a. will be 2.8 percent if inflation turns out to be 2 percent; it will be higher if inflation
turns out to be higher than 2 percent.
b. will be 2.8 percent if inflation turns out to be 2 percent; it will be lower if inflation
turns out to be higher than 2 percent.
c. will be 3.2 percent if inflation turns out to be 2 percent; it will be higher if inflation
turns out to be higher than 2 percent.
d. will be 3.2 percent if inflation turns out to be 2 percent; it will be lower if inflation
turns out to be higher than 2 percent.

QN=233 (17951) According to the classical dichotomy, which of the following is affected by monetary
factors?..
a. (i) nominal wages
b. (ii) the price level
c. (iii) nominal GDP
d. All of (i), (ii), and (iii) are correct.

QN=248 (17976) Suppose that the real exchange rate between the United States and Vietnam is defined
in terms of baskets of goods. Other things the same, which of the following will
increase the real exchange rate (that is increase the number of baskets of Vietnamese
goods a basket of U.S. goods buys)?.
a. (i) an increase in the quantity of Vietnamese currency that can be purchased with a
dollar
b. (ii) an increase in the price of U.S. baskets of goods
c. (iii) a decrease in the price in Vietnamese currency of Vietnamese goods
d. All of (i), (ii), and (iii) are correct.

QN=244 (17966) When Microsoft establishes a distribution center in France, U.S. net capital outflow..
a. increases because Microsoft makes a portfolio investment in France.
b. decreases because Microsoft makes a portfolio investment in France.
c. increases because Microsoft makes a direct investment in capital in France.
d. decreases because Microsoft makes a direct investment in capital in France.

QN=243 (17965) Stacey, a U.S. citizen, buys a bond issued by an Italian pasta manufacturer...
a. This purchase is foreign direct investment. By itself it increases U.S. net capital
outflow.
b. This purchase is foreign direct investment. By itself it decreases U.S. net capital
outflow.
c. This purchase is foreign portfolio investment. By itself it increases U.S. net capital
outflow.
d. This purchase is foreign portfolio investment. By itself it decreases U.S. net capital
outflow.

QN=284 (17998) If the demand for dollars in the market for foreign-currency exchange shifts left, then
the exchange rate..
a. rises and the quantity of dollars exchanged rises.
b. rises and the quantity of dollars exchanged does not change.
c. falls and the quantity of dollars exchanged falls.
d. falls and the quantity of dollars exchanged does not change.

QN=277 (17989) In the open-economy macroeconomic model, the key determinant of net capital
outflow is the..
a. nominal exchange rate.
b. nominal interest rate.
c. real exchange rate.
d. real interest rate.

QN=325 (18021) Recessions in China and India would cause..

a. the U.S. price level and real GDP to rise.
b. the U.S. price level and real GDP to fall.
c. the U.S. price level to rise and real GDP to fall.
d. the U.S. price level to fall and real GDP to rise.

QN=319 (18043) The effects of a higher than expected price level are shown by..
a. shifting the short-run aggregate supply curve right.
b. shifting the short-run aggregate supply curve left.
c. moving to the right along a given aggregate supply curve.
d. moving to the left along a given aggregate supply curve.

QN=327 (18019) The classical dichotomy and monetary neutrality are represented graphically by..
a. an upward-sloping long-run aggregate-supply curve.
b. a vertical long-run aggregate-supply curve.
c. an upward-sloping short-run aggregate-curve.
d. a downward-sloping aggregate-demand curve.

QN=334 (18064) Assume the MPC is 0.75. Assuming only the multiplier effect matters, a decrease in
government purchases of $100 billion will shift the aggregate demand curve to the..
a. (i) left by $200 billion.
b. (ii) left by $400 billion.
c. (iii) right by $800 billion.
d. None of (i), (ii), and (iii) is correct.

QN=337 (18067) Using the liquidity-preference model, when the Federal Reserve increases the money
supply,..
a. the equilibrium interest rate decreases.
b. the aggregate-demand curve shifts to the left.
c. the quantity of goods and services demanded is unchanged for a given price level.
d. the long-run aggregate-supply curve shifts to the right.

QN=203 (17920) If an economy used gold as money, its money would be..
a. commodity money, but not fiat money.
b. fiat money, but not commodity money.
c. both fiat and commodity money.
d. functioning as a store of value and as a unit of account, but not as a medium of
exchange.

QN=193 (17918) If people decide to hold more currency relative to deposits, the money supply..
a. falls. The larger the reserve ratio is, the more the money supply falls.
b. falls. The larger the reserve ratio is, the less the money supply falls.
c. rises. The larger the reserve ratio is, the more the money supply rises.
d. rises. The larger the reserve ratio is, the less the money supply rises.

QN=219 (17936) According to the quantity theory of money, a 2 percent increase in the money supply.
a. causes the price level to fall by 2 percent.
b. leaves the price level unchanged.
c. causes the price level to rise by less than 2 percent.
d. causes the price level to rise by 2 percent.
QN=23 Refer to Figure 30-3. Suppose the relevant money-supply curve is the one labeled MS2; also
2 suppose the economy’s real GDP is 45,000 for the year. If the money market is in equilibrium, then
(17931 the velocity of money is approximately
) .

a. 4.5
b. 6.0
c. 9.0
d. 12.0

QN=212 (17955) Refer to Figure 30-1. If the money supply is MS2 and the value of money is 2, then
.
a. the value of money is lower than its equilibrium level.
b. the price level is higher than its equilibrium level.
c. the quantity of money demanded is greater than the quantity of money supplied.
d. the quantity of money supplied is greater than the quantity of money demanded.

QN=215 (17956) Suppose each good costs $5 per unit and Megan holds $40. What is the real value of
the money she holds?..
a. $40. If the price of goods rises, to maintain the real value of her money holdings she
needs to hold more dollars.
b. 8 units of goods. If the price of goods rises, to maintain the real value of her money
holdings she needs to hold more dollars.
c. $40. If the price of goods rises, to maintain the real value of her money holdings she
needs to hold fewer dollars.
d. 8 units of goods. If the price of goods rises, to maintain the real value of her money
holdings she needs to hold fewer dollars.

QN=241 (17939) Suppose one year ago the price index was 120 and Mark purchased $20,000 worth of
bonds. One year later the price index is 126. Mark redeems his bonds for $22,250 and
is in a 40 percent tax bracket. What is Mark’s real after-tax rate of interest to the
nearest tenth of a percent?.
a. 4.3 percent
b. 3.1 percent
c. 1.8 percent
d. 1.2 percent

QN=236 (17945) The term hyperinflation refers to..

a. the spread of inflation from one country to others.
b. a decrease in the inflation rate.
c. a period of very high inflation.
d. inflation accompanied by a recession.

QN=262 (17963) If the exchange rate is 50 Bangladesh taka per dollar and a bushel of rice costs 180
taka in Bangladesh and $3 in the United States, then the real exchange rate of the US
dollar is..
a. greater than one and arbitrageurs could profit by buying rice in the United States and
selling it in Bangladesh.
b. greater than one and arbitrageurs could profit by buying rice in Bangladesh and selling
it in the United States.
c. less than one and arbitrageurs could profit by buying rice in the United States and
selling it in Bangladesh.
d. less than one and arbitrageurs could profit by buying rice in Bangladesh and selling it in
the United States.

QN=248 (17976) Suppose that the real exchange rate between the United States and Vietnam is defined
in terms of baskets of goods. Other things the same, which of the following will
increase the real exchange rate (that is increase the number of baskets of Vietnamese
goods a basket of U.S. goods buys)?.
a. (i) an increase in the quantity of Vietnamese currency that can be purchased with a
dollar
b. (ii) an increase in the price of U.S. baskets of goods
c. (iii) a decrease in the price in Vietnamese currency of Vietnamese goods
d. All of (i), (ii), and (iii) are correct.

QN=260 (17959) One year a country has negative net exports. The next year it still has negative net
exports and imports have risen more than exports...
a. its trade surplus fell.
b. its trade surplus rose.
c. its trade deficit fell.
d. its trade deficit rose

QN=283 (18008) Other things the same, a lower real interest rate decreases the quantity of.
a. loanable funds demanded.
b. loanable funds supplied.
c. domestic investment.
d. net capital outflow.

QN=294 (17995) In the open-economy macroeconomic model, if the supply of loanable funds increases,
then the interest rate.
a. income
b. tastes
c. Price
d. Expectations
QN=300 (18027) At a given price level, an increase in which of the following shifts aggregate demand to
the right?.
a. (i) consumption
b. (ii) investment
c. (iii) government expenditures
d. All of (i), (ii), and (iii) are correct.

QN=309 (18017) The model of short-run economic fluctuations focuses on the price level and.
a. (i) real GDP.
b. (ii) economic growth.
c. (iii) the neutrality of money.
d. None of (i), (ii), and (iii) is correct.

QN=310 (18034) The long-run aggregate supply curve would shift right if immigration from abroad..
a. increased or Congress made a substantial increase in the minimum wage.
b. decreased or Congress abolished the minimum wage.
c. increased or Congress abolished the minimum wage.
d. decreased or Congress made a substantial increase in the minimum wage.

QN=343 (18046) In the long run, changes in the money supply affect.
a. (i) prices.
b. (ii) output.
c. (iii) unemployment rates.
d. All of (i), (ii), and (iii).