Given the nation has a capital account surplus and a federal budget deficit, which of the following is an effect of an increase in interest rates?

Lower structural unemployment

An increase in the trade deficit

Aggregate demand and aggregate supply will intersect in a steeper section of the aggregate supply curve

An outward shift in the production possibilities frontier

An inward shift of the consumption possibilities frontier

Which of the following pairs of actions suggest that fiscal policy and monetary policy are working in the same direction?

Taxes are lowered, and the discount rate is raised.

Government spending increases, and the Fed sells bonds on the open market.

Government spending and taxes increase by the same amount, and the required reserve ratio is

increased.

Taxes are increased, and the Fed buys bonds on the open market.

Government spending and taxes decrease by the same amount, and the Fed sells bonds on the open

market.

Which of the following is true if cyclical unemployment is high?

Velocity is low.

Monetary policy has little effect on the price level.

The marginal propensity to consume will be particularly high.

The country 's currency has a low value in foreign exchange markets.

The Fed could bring the economy back toward full employment by selling bonds on the open market.

For the last several years, the money supply in the fictitious nation of Mauritania has been rising by 10% annually, and inflation has been running at 8%. The central bank is going to cut growth of the money supply back to 3% annually. Which of the following statements regarding the effects of this action is true, ceteris paribus?

According to the quantity theory of money, inflation will be 1% in the next year.

According to the quantity theory of money, economic growth will slow down.

If the assumption of rational expectations holds, output will fall by 10% in the next year.

If the assumption of adaptive expectations holds, there will be no effect on output in the following year.

None of the above

31. Which of the following is not a component of aggregate demand?

Sales tax receipts

Government spending

Investment

Consumption

Net exports

Which of the following is an effect of increased labor productivity?

An increase in aggregated demand

An increase in aggregate supply

A decrease in aggregate demand

An increase in the marginal propensity to save

An indeterminate change in the consumption possibilities frontier

Which type(s) of unemployment exist in an economy at full employment?

Frictional

Structural

Cyclical

Frictional and structural

Frictional and cyclical

Suppose the Irish economy is at full employment. Suppose in a few months, the exchange rate of the Irish national currency, the punt, will decline, giving the Irish relatively less purchasing power in foreign markets. What will happen to the price level and real GDP in Ireland?

The price level will fall, and real GDP will rise.

The price level will fall, and real GDP will not change.

The price level will rise, and real GDP will rise.

The price level will fall, and real GDP will fall.

The price level will not change, and the real GDP will fall.