Can you tell me if my answers are correct? Thank you.

An inflationary output gap: 0 occurs when actual national income exceeds potential national income. 0 is observed before the price of factors of production starts to decline. 0 occurs when there is inflation. G) is most likely observed during declining economic activity. Question 2 (1 point) ~/ Saved Consider a non-oil-exporting economy in its long-run equilibrium. Which of the following explains the ultimate short-run effect of a decrease in international oil price on the GDP of this economy? 0 The GDP will ultimately increase. 0 The GDP will ultimately decrease. The GDP will ultimately be at potential output, in the absence of downward-sticky wages. O The effect on GDP will be ambiguous. Question 3 (1 point) ~/ Saved In a demand driven economy where AE = C + l + G, if government implements an expansionary fiscal policy of "t l " , the total change in equilibrium level of output can be calculated according to: AYe = AA/(l - 2). 6) False, the above equation is only valid when the marginal propensity to spend out of national income is constant. 0 False, since when prices change along the way, the total change in equilibrium output will be less than the above. 0 True. 0 False, because the multiplier effect does not exist in such an economy. Question 4 (1 point) ~/ Saved Suppose current equilibrium nominal GDP is $450 billion, the GDP deflator is 150, and the target or desired level of real GDP is $365 billion. Given a multiplier value of 1.85, then: 0 The net tax rate should be increased by 5 percent. 0 government expenditures should increase by $120.25 billion. 0 the net tax rate should be increased from 0.2 to 0.3. 6) Government expenditures should increase by $35.14 billion. Question 5 (1 point) ~/ Saved Suppose the central bank suddenly increases the supply of money in the economy. Assuming a downward sloping curve for money demand. how do you expect the central bank' 5 action to affect the equilibrium interest rate in the money market? 6) Equilibrium interest rate declines since it becomes cheaper to borrow money. 0 Equilibrium interest rate increases since increase in supply of money causes the money demand graph to shift to the right. 0 Equilibrium interest rate declines since banks induce from increasing bond prices that yield rates are declining. O Equilibrium interest rate increase since increase in money supply makes money to become cheaper. Question 6 (1 point) ~/ Saved A recessionary output gap results in wages to decline because it is needed for the economy to get back to long-run equilibrium. Question 7 (1 point) ~/ Saved Consider an oil-exporting economy in its long-run equilibrium. Given the ultimate short-run effect of an increase in international oil price on the GDP of this economy assuming much stronger effect on the demand side than on the supply side. do you advise any policies and if so of which kind? 0 I advise an expansionary monetary policy on the basis that recessionary output gaps do not get corrected by internal forces of the economy due to wages being sticky downward. O I advise a contractionary fiscal policy on the basis that inflationary output gaps do not get corrected by internal forces of the economy due to wages being sticky downward. G) I advise a contractionary fiscal or monetary policy on the basis that recessionary output gaps do not get corrected by internal forces of the economy due to wages being sticky downward. O I advise no policy and suggest to wait for the full effect on the GDP in this economy. Question 8 (1 point) J Saved According to the classical view of economic growth, to generate higher rates of economic growth an economy can: 0 Implement contractionary monetary policies to promote investment. 0 Implement contractionary fiscal policies. O Forgo current material standard of living and save more. 6) Implement contractionary fiscal or monetary policies to promote investment. The present value of a bond that matures in two years and has a face value of $600, and annual coupon rate of 5 percent, when interest rate is 10 percent is: C) $544.22 0 $30 6) $495.87 C) $547.93 Question 10 (1 point) ~/ Saved Consider a non-oil-exporting economy in its long-run equilibrium. Given the ultimate short-run effect of an increase in international oil price on the GDP of this economy. do you advise any policies and if so of which kind? 0 I advise an expansionary monetary policy on the basis that recessionary output gaps do not get corrected by internal forces of the economy due to wages being sticky downward. OI advise no policy and suggest to wait for the full effect on the GDP in this economy. 0 I advise a contractionary fiscal policy on the basis that inflationary output gaps do not get corrected by internal forces of the economy due to wages being sticky downward. I advise a contractionary fiscal or monetary policy on the basis that recessionary output gaps do not get corrected by internal forces of the economy due to wages being sticky downward. Question 11 (1 point) ~/ Saved Which of the following correctly expresses the relationship between real interest rate and nominal interest rate? 0 Nominal interest rate = Real interest rate ~ Inflation rate. 0 Real interest rate is what is paid to account holders. Nominal interest rate does not exist. 0 Real interest rate is measured for the base year while nominal interest rate is for the current year. 6) Real interest rate = Nominal interest rate - Inflation rate. Question 12 (1 point) ~/ Saved Exogenous increase in the price of a factor of production makes a typical price-taker firm to cut production. since as result their Unit Cost of Production (UCP) will increase to a level above their current sale price. That means they are making a loss for the last unit they produced. and that they should not produce that last unit to avoid the loss and maximise their profits. They cut production unit by unit as long as their UCP is above their sale price until UCP matches it. At that level of production. they have maximised their profits. This makes a move along the Aggregate Supply curve to left. Question 13 (1 point) Saved Consider a new deposit to the Canadian banking system of $2000. Suppose that all commercial banks have a target reserve ratio of 8 percent and there is no cash drain. The following table shows how deposits, reserves, and loans change as the new deposit enables the banks to create new deposit money. Choose from the following to complete the entire table below: Round Change in Change in Change in Deposits Reserves Loans First $ 2, 000 $ 160 $ 1, 840 Second m n P Third q S Om= 1,840.00; n = 1,692.80; p = 147.20; q = 1,692.80; r = 1,557.38; s = 135.42. Om = 2,160.00; n = 172.80; p = 1,987.20; q = 2,332.80; r = 186.62; s = 2, 146.18. Om= 2,160.00; n = 1,987.20; p = 172.80; q = 2,332.80; r = 2,146.18; s =186.62. Om = 1,840.00; n = 147.20; p = 1,692.80; q = 1,692.80; r = 135.42; s = 1, 557.38.Question 14 (1 point) ~/ Saved The following diagram shows an equilibrium in an economy. Which of the following best describes the macro equilibrium of this economy? P AS O A long-run equilibrium. where there is a recessionary output gap. 0 A long-run equilibrium. where there is an inflationary output gap. O A short-run equilibrium, where there is an inationary output gap. 6) A short-run equilibrium, where there is a recessionary output gap. Question 15 (1 point) ~/ Saved Consider a non-oil-exporting economy in its long-run equilibrium. Which of the following explains the ultimate long-run effect of a decrease in international oil price on the GDP of this economy? 0 The effect on GDP will be ambiguous. The GDP will ultimately be at potential output. in the absence of downward-sticky wages. O The GDP will ultimately decrease. O The GDP will ultimately increase. Question 16 (1 point) ~/ Saved Which of the following best expresses the roles of money? O Being made in different denominations (divisibility of money); Being made of durable material (durability of money); Being easy to carry and transfer (transferability of money). O A medium to overcome the need for double co-incidence of needs (barter economy role of money): A medium that keeps value (store of value); A medium that can account for inflation (accountability). @ medium for conducting transactions (medium of exchange); A medium for storing purchasing power for future (store of value); A medium for measuring monetary value of things (unit of account). O None of the above. Question 17 (1 point) ~/ Saved Consider an economy characterized by the following equations: C = 500 + 0.5Y - 200i | = 100 G = 200 where 'C' is desired consumption. 'l' is desired investment, '6' is desired government purchase, 'i' is interest rate. and Y is national income. Suppose the interest rate is 5% (Le, 'i = 0.05' ). The equilibrium condition, the aggregate expenditure equation derived from the equations above, and the equilibrium level of national income are: 0 AE = 490 + 0.4Y; AE = YD; Ye = 816.67. OAE = 790 + 0.5Y; AE = Y; Y6 = 1.580. O Cannot be calculated since the tax rate is not known. 6) AE = 800 + 0.5Y; AE = Y; Y9 = 1.600. Question 18 (1 point) How does a decrease in supply of money affect the consumption, investment, net exports expenditures, and through these the position of the aggregate expenditure curve? O Increases consumption and investment autonomously by decreasing the opportunity cost of holding on to money; decreases net exports autonomously by decreasing the exchange rate. The overall effect on the aggregate expenditure graph is. therefore. ambiguous. O Decreases consumption and investment autonomously by decreasing the opportunity cost of holding on to money; decreases net exports autonomously by generating outflow of cash. The overall effect on the aggregate expenditure graph is a shift down at constant prices. O Decreases consumption and investment autonomously by increasing the opportunity cost of holding on to money; decreases net exports autonomously by decreasing the exchange rate. The overall effect on the aggregate expenditure graph is a shift down at constant prices. O Decreases consumption and investment autonomously by increasing the opportunity cost of holding on to money; decreases net exports autonomously by increasing the exchange rate. The overall effect on the aggregate expenditure graph is a shift down at constant prices. Question 19 (1 point) Monetary policy is neutral in the long-run O because transition/adjustment forces will not take place due to wages being sticky downward. O if potential output of the economy grows in the long-run. O if investment is very sensitive to slight changes in interest rate. Q If potential output of the economy remains constant in the long-run. Question 20 (1 point) V Saved The unemployment rate is measured as: G) the fraction of labour force that remains unemployed. O the number of unemployed people expressed as a fraction of total population. 0 the number of people who do not have a job. 0 the percentage change in the number of unemployed people over some time period. Question 21 (1 point) ~/ Saved Which of the following policies will boost the output in the economy in the short-run: 0 Open market action of the central bank in the form of buying assets or decrease in the required reserve ratio. 0 Increase in the required reserve ration or open market action of the central bank in the form of selling assets. 0 Open market action of the central bank in the form of selling assets. 6) Increase in the required reserve ratio or increase in the interest rate on loans to commercial banks from by central bank. Question 22 (1 point) V Saved Consider an economy characterized by the following equations: C = 500 + 0.5Y - 200i | = 100 G = 200 where 'C' is desired consumption. 'l' is desired investment, '6' is desired government purchase, 'i' is interest rate, and Y is national income. Suppose the interest rate is 7% (i.e., 'i = 0.07' ). The equilibrium condition. the aggregate expenditure equation derived from the equations above, and the equilibrium level of national income are: O A $10 increase in the national income increases the autonomous desired expenditure by $5. 6) A $1 increase in the autonomous desired expenditure increase the equilibrium national income by $2. O A $1 increase in the desired expenditure increase the equilibrium national income by $0.5. O A $1 increase in the national income increases the desired expenditure by $0.5. Question 23 (1 point) J Saved A leftward shift in the AS curve can be caused by: O an increase in the price level. 6) increases in productivity and/or decreases in factor prices. O decreases in productivity. O increases in factor prices. Question 24 (1 point) ~/ Saved Consider a non-oil-exporting economy in its short-run equilibrium. Which of the following explains the immediate short-run effect of a decrease in international oil price on the GDP of this economy? O The GDP of this economy decreases along the original Aggregate Supply graph. O The GDP of this economy increases along the original Aggregate Supply graph. 0 The GDP of this economy decreases as a shift of the Aggregate Supply graph to left. The GDP of this economy increases as a shift of the Aggregate Supply graph to right. Question 25 (1 point) ~/ Saved GDP is by definition equal to: O the value of the profits made by firms. O none of the above. G) the number of domestic income earners. O the value of all products in a nation