44. 45. 46. 47. Production Point n n The table shows the production possibilities for Country X in producing shirts and chairs when it uses all its available resources. The opportunity cost of producing one additional chair is (A) zero (B) constant (C) increasing (D) decreasing (E) indeterminate An increase in which of the following will most likely cause an increase in aggregate demand and ination in the short run? (A) Income tax rates (B) Input prices (C) Government spending (D) Real interest rates (E) Savings If the central bank of a country wishes to maintain a stable nominal interest rate after a decrease in consumers' spending, taking which of the following actions will achieve the goal? (A) Increasing government spending (B) Increasing income tax rates (C) Decreasing the required reserve ratio (D) Decreasing the discount rate (E) Selling government bonds Investment in physical capital is most likely to occur as a result of an increase in (A) interest rates (B) ination rates (C) business condence (D) money demand (E) personal consumption 48. 49. 50. 51. Country X's government increases its spending without raising taxes. Which of the following is true about the effect on Country X's real interest rates and its subsequent effect on Country X' 5 net exports? (A) Real interest rates increase and net exports increase. (B) Real interest rates increase and net exports decrease. (C) Real interest rates increase with no change in net exports. (D) Real interest rates decrease and net exports increase. (E) Real interest rates decrease and net exports decrease. Which of the following shifts the money demand curve to the right? (A) An increase in the price level (B) A decrease in the price level (C) An increase in interest rates (D) A decrease in interest rates (E) A decrease in the nominal gross domestic product An increase in the money supply will result in an increase in (A) output in the short run and in the long run (B) ination in the short run and an increase in output in the long run (C) ination in the short run and no change in output in the long run (D) output in the long run but not in the short run (E) output in the long run and no change in ination in the short run Which of the following is an example of frictional unemployment? (A) A former mayor doing volunteer work (B) A factory worker who loses her job because of recession (C) A college student working part-time at the campus bookstore (D) A college graduate interviewing for two available positions (E) An architect whose job is replaced by computer software that designs buildings