1. The euro has appreciated against the dollar. A possible explanation is that (a) the US interest rate has been lowered. (b) the eurozone interest rate has been lowered. (c) the US real GDP has fallen. (d) None of the above 2. The price of a certain commodity in 1970 was 0.206. The CPI in that year was 40. The CPI is currently 180. Which is currently the price of the commodity? (a) 0.90 E (b) 0.04 E (c) 4.5 E (d) None of the above 3. The labour force consists of (a) the employed people. (b) the total population of working age. (c) the participation rate. [d) the employed people plus the unemployed people. 4. Which one is a monetary policy instrument of central banks? The money multiplier [b) The reserve ratio (c) The GDP deflator (d) The inflation rate 5. What policy neutralizes the effect on the inflation rate and the real GDP of a positive shock to the aggregate supply function? (a) An expansionary fiscal policy [b) A contractionary fiscal policy (c) A contractionary monetary policy (d) None of the above 6. Which sentence is true? (a) An increase in the government revenues due to a tax raise stimulates the economic activity (b) A cut in public spending or a tax raise or both tend to depress aggregate demand (c) An increase in public spending causes a fall in the overall economic activity (d) Only (a) and (c) are true 7. If the GDP deflator goes up and nominal GDP goes down, then (a) real GDP goes down. (b) real GDP goes up. [c) real GDP remains constant. (d) nominal GDP goes up. 8. What tends to shift the aggregate demand function to the right? An increase in imports (b) A reduction in the firms' production costs (c) A fall in the proportion of income that is saved (d) A decline in aggregate income 9. A raise in the reserve ratio increases the expenditure multiplier. (b) increases the money multiplier. [c) lowers the expenditure multiplier. (d) lowers the money multiplier. 10. The expenditure multiplier effect means that (a) an exogenous rise in the inflation rate causes an increase in the interest rate ,, which in turn causes an increase in the inflation rate, which causes an increase in . (b) an exogenous increase in aggregate demand AD causes an income rise, which rises AD, which rises income... (c) an increase in the monetary base MO causes an increase in the money stock M1, which causes an increase in MO, which causes an increase in M1... (d) aggregate demand is a multiple of the government expenditure