8. Which of the following policy actions is taken by the government (or central bank) of a country to finance its budget deficit?

A. Borrowing from the central bank or overseas B. Decreasing the taxes for households C. Investing more money into public welfare D. Printing more money E. Selling of bonds

9. Assume that the real interest rate falls in Country Y. Which of the following will occur?

A. There will be an inflow of investment funds to Country Y and a depreciation of Country Y's currency. B. There will be an outflow of investment funds from Country Y to other countries and a depreciation of Country Y's currency. C. There will be an outflow of funds from other countries to Country Y, increasing the demand for Country Y's currency. D. Residents of Country Y will no longer invest funds in other countries, limiting their investment to opportunities in Country Y. E. There will be an increased demand for the currency of Country Y, an appreciation of its currency, and a reduction in net exports from Country Y.

10. Which of the following is true about the long-run Phillips curve?

A. The long-run Phillips curve is a downward sloping curve. B. The long-run Phillips curve is horizontal and inelastic to unemployment. C. The long-run Phillips curve is vertical at the natural rate of employment. D. The long-run Phillips curve shows an inverse relationship between inflation and unemployment. E. The long-run Phillips curve shows that a higher rate of cyclical unemployment will increase the rate of inflation.

11. Assume that a country X engages in activities that lead to a depreciation of its currency. What is the impact of currency depreciation on net exports of a country?

A. Currency depreciation will not affect the exports but will affect the imports of a country. B. Demand for imports from abroad increases. C. Net exports will fall. D. Net exports will remain unchanged. E. The net exports will rise.

12. Which of the following components will be included in determining the aggregate demand of a country?

A. Consumption of durable goods by foreign households B. Per capita income of the population C. Technological innovation D. The government spending for new highway construction E. The net value of cotton exported by another country