25. 26. 27. 28. Which of the following measures the opportunity cost of holding currency? (A) The nominal wage rate (B) The increase in the demand for money (C) The forgone interest on alternative assets (D) The ability to access currency to meet unexpected expenses (E) The average income tax rates A contractionary monetary policy combined with an expansionary scal policy will (A) decrease both income and consumption (B) increase both income and consumption (C) have uncertain effects on the interest rate and investment (D) increase the interest rate and decrease investment (E) increase both the interest rate and investment Ms. Smith withdraws $1,000 from her safe and deposits the money in a bank. If the bank holds no excess reserves and the reserve requirement is 10 percent, how will this deposit increase the bank's required reserves and the bank's loans? Required Reserves Loans (A) $1,000 $9,000 (B) $1,000 $10,000 (C) $900 $100 (D) $100 $900 (E) $100 $1,000 A country can have an increased surplus in its balance of trade as a result of (A) an increase in domestic ination (B) declining imports and rising exports (C) higher tariffs imposed by its trading partners (D) an increase in nancial capital inow (E) an appreciating currency 29. Country X has a budget decit. Which of the following changes in government budget outlays and tax revenues will result in a decrease in Country X's government budget decit? Government Outlays (A) Fall by $100 million (B) Fall by $200 million (C) Rise by $300 million (D) Rise by $400 million (E) Rise by $500 million Tax Revenues Fall by $600 million Fall by $200 million Fall by $300 million Rise by $600 million Rise by $500 million