In Canada, a donut costs $1.50. In Italy, the same donut costs 1 euro. If the exchange rate is 0.5 euros per Canadian dollar, what is the Real Exchange Rate?

a.0.67 Canadian donuts per Italian donut.

b.0.75 Canadian donuts per Italian donut.

c.1.33 Canadian donuts per Italian donut.

d.1.50 Canadian donuts per Italian donut.

What happens when there is excess Money Supply?

a.people will try to buy interest-bearing assets such as bonds, and the interest rate will rise

b.people will try to sell interest-bearing assets such as bonds, and the interest rate will rise

c.people will try to buy interest-bearing assets such as bonds, and the interest rate will fall

d.people will try to sell interest-bearing assets such as bonds, and the interest rate will fall

If theMarginal Propensity to Consume(MPC) is 0.75 and government increases spending by $60 million, what will be the demand for goods and services generated by this increase?

a.$150 million

b.$240 million

c.$45 million

d.$80 million

How is it that automatic stabilizers change the government deficit and taxes during an expansion?

a.both the deficit and taxes decrease

b.both the deficit and taxes increase

c.the deficit increases and taxes decrease

d.the deficit decreases and taxes increase