1,

Can a government always collect more seignorage simply by letting the money supply grow faster?

A.

No, if a higher monetary growth rate raises the nominal interest rate and reduces the real balances people are willing to hold, it leads to a fall in real seignorage.

B.

No, if a higher monetary growth rate raises the real interest rate and reduces the real balances people are willing to hold, it may eventually lead to a fall in real seignorage.

C.

Yes, as long as the growth rate of money supply does not alter the real interest rate, the nominal interest would not affect the real balances people are willing to hold.

D.

Yes, as long as the growth rate of money supply exceeds the people's expectation, it provides the government more resources for expenditure.

2,

Today's world is characterized by a vast international dispersion in levels of income and well-being, which contradicts the simple theory of convergence. Which of the following statements describes the apparent failure of the theory?

A.

Because of low marginal products of investment in developing countries, the low-income countries tend to grow more slowly than rich ones.

B.

The high risks of investing in many developing countries are the primary reasons for the failure of the model.

C.

The fundamental assumptions of the hypotheses are erroneous.

D.

Some developed countries usurped the major portion of the world's available current account surpluses, thereby limiting the flow of capital to developing countries.