14. Potential problem(s) of the national debt is/are

A) government borrowing may crowd out private investment.

B) interest payments on the debt may be a burden for future generations if the debt is largely held by non-Canadians.

C) high interest payments on the debt may create self-perpetuating debt.

D) going into debt to finance consumption.

E) all of the above.

15. Which statement best describes how rate of return parity happens?

A) The expected depreciation of the Canadian dollar is currently lowering demand for it.

B) The price of apples is the same in Canada and the U.S., adjusting for the exchange rate.

C) The market feeling is that the Canadian dollar is overvalued and will likely appreciate.

D) The recent high Canadian interest rate has decreased the supply of Canadian dollars.

E) None of the above.

16. In the loanable funds market,

A) when interest rates are higher, businesses borrow more money for investment.

B) when interest rates are higher, consumers borrow more money for mortgages.

C) an increase in consumer savings causes the interest rate to rise.

D) savers are the demanders, and borrowers are the suppliers.

E) none of the above are true.

17. If nominal GDP is 4,000 and the money supply is 80, what is the velocity of money?

A) 50

B) 25

C) 4

D) 16

E) Cannot be calculated without more information.

18. The Phillips Curve suggests that governments can reduce unemployment by increasing

A) taxes.

B) the price of oil.

C) unemployment insurance benefits.

D) the money supply.

E) wages.

19. Which is not part of the story of cost-push inflation?

A) increasing costs push up output prices

B) demand for output decreases relative to supply

C) increasing quantity of money

D) businesses have unsold products and services

E) consumers have less income to spend