1.What will happen to the demand of money if there is an increase on interest rates?

a.People will hold on their money for consumption.

b.There will be an increase on investments. **

c.There will be an increase on demand of money.

d.There will be a decrease on demand of money.

2.How does Phillips's curve describe the relation between inflation and unemployment rate?

a.Zero unemployment rate will surge inflation.**

b.An economy should maintain low inflation rate, high output growth and low unemployment rate.

c.The increase in unemployment will increase inflation.

d.Prices are stable at regardless of changes in unemployment rate.

3.Which of the following best describe Okun's Law?

a.There is an inverse relationship between unemployment rate and output growth.

b.When unemployment rate increases, output growth rate increases as well.

c.Output growth rate is constant regardless of unemployment rates movements.

d.Output growth rate is higher than unemployment rate.

4. When using the expenditure approach to measure GDP, the largest share of GDP generally consists of

a. Investment.

b. Consumption.

c. Government.

d. X-M

5. Normative statements.

a. Can be refuted, proved with evidence

b. Can be refuted, proved withoutevidence

c. Can not be refuted, proved with evidence

d. Can not be refuted, proved without evidence

6.Keynesian model

a. Aggregate demand determines the level of output only

b. Aggregate demand determines the level of employment only

c. Aggregate demand determines both level of output and employment

d. The process of translating nominal GDP into real GDP