5. If the investor does not exercise the call option, the call option is said to be out of money if a. The investor is out of the premium he/she paid. b. The investor sells the option c. The investor buys the option d. None of the above

6. Aggregate demand can be measured using a. Nominal money supply and velocity b. Consumption, investment and government spending c. Keynesian approach or the monetarist approach d. All of the above

7. If there is an inflationary gap, the following can happen except a. The real wages will fall initially but then will rise as nominal wages increase b. The cost of production will rise due to the rise in wages c. The real wages will increase immediately driving the cost of production up d. None of the above

8. If there is a recessionary gap, then a. The output level will be less than the natural rate b. The aggregate supply curve will shift up in the short-run c. The price level will go down as the aggregate supply increases d. Either a. or c.

9. In interest rate swaps a. Two parties make periodic interest payments on loans b. Two parties exchange debt by lending each other money c. Either a. or b. since both parties swap debts d. All of the above

10. Interest rate swaps a. Reduce the interest rate risk b. Reduce the foreign exchange risk c. Reduce the default risk d. All of the above