Multiple choice:

1)

(C10) In the economy of country A in 2016, consumption was $6000, exports were $1000, GDP was $12,000, government purchases were $1800, and imports were $1200. What was country A's investment in 2016?

4 Points

• $1,200
• $4,400
• $7,600
• $0

2)

(C11) The price index was 6120 in 2015 and 126 in 2016. What was the inflation rate?

4 Points

• 5%
• 102%
• 7.2%
• 6%

3)

(C11) If the nominal interest rate is 7 percent and the rate of inflation is 4 percent, then the real interest rate is

4 Points

• 6%
• 11%
• 13%
• 3%

4)

(C12) Jack is a plumber. Which of the following are included in his human capital?

4 Points

• the knowledge he learned on the job, and the tools he uses
• neither the knowledge he learned on the job nor the tools he uses
• the tools he uses, but not the knowledge he learned on the job
• the knowledge he learned on the job, but not the tools he uses

5)

(C13) The economy's two most important financial markets are

4 Points

• banks and the stock market.
• financial markets and financial institutions.
• the bond market and the stock market.
• the investment market and the saving market.

6)

(C13) Two of the economy's most important financial intermediaries are

4 Points

• banks and mutual funds.
• the stock market and the bond market.
• suppliers of funds and demanders of funds.
• banks and the bond market.

7)

(C14) Suppose you put $100 into a bank account today. Interest is paid annually and the annual interest rate is 3%. The future value of the $100 in 2 years to the nearest cent is

4 Points

• $109.08
• $105.00
• None of the above is correct.
• $106.09

8)

(C15) Suppose that some country had an adult population of about 25 million, a labor-force participation rate of 60 percent, and an unemployment rate of 6 percent. How many people were unemployed?

4 Points

• 1.5 million
• 0.9 million
• 6 million
• 0.846 million

9)

(C15) When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the result is a surplus of labor.

4 Points

• True
• False

10)

(C16) Which of the following is included in M2 but not in M1?

4 Points

• currency
• demand deposits
• savings deposits
• All of the above are included in both M1 and M2.

11)

(C16) If the reserve ratio is 2 percent, then $1,000 of additional reserves can create up to

4 Points

• $200 of new money.
• $50,000 of new money.
• $50,500 of new money.
• $2,000 of new money.

12)

(C17) The value of money falls as the price level

4 Points

• falls, because the number of dollars needed to buy a representative basket of goods rises.
• rises, because the number of dollars needed to buy a representative basket of goods falls.
• falls, because the number of dollars needed to buy a representative basket of goods falls.
• rises, because the number of dollars needed to buy a representative basket of goods rises.

13)

(C17) If the number of dollars needed to buy a representative basket of goods falls, the price level

4 Points

• falls, so the value of money rises.
• falls, so the value of money falls.
• rises, so the value of money rises.
• rises, so the value of money falls.

14)

(C17) As the price level falls, the value of money falls.

4 Points

• True
• False

15)

(C17) If velocity = 4, the price level = 4, and the real value of output is 2,000 then the quantity of money is

4 Points

• $16,000.
• $8,000.
• $32,000.
• $2,000.

16)

(C18) If a U.S. shirt maker purchases cotton from Brazil, U.S. net exports

4 Points

• decrease, and U.S. net capital outflow decreases.
• increase, and U.S. net capital outflow increases.
• decrease, and U.S. net capital outflow increases.
• increase, and U.S. net capital outflow decreases.

17)

(C18) While on a study abroad program you see a McDonald's in Paris. A combo meal costs 8 euros. The same meal costs $6 in the U.S. and the exchange rate is .75 euros per dollar. Find the real exchange rate and in terms of dollars where is the combo meal cheaper?

4 Points

• .5625, the combo meal in Paris is cheaper
• 1, the combo meal in Paris is cheaper
• .5625, the combo meal in US is cheaper
• 1, the combo meal in US is cheaper

18)

(C19) Other things the same, a lower real interest rate decreases the quantity of

4 Points

• loanable funds demanded.
• net capital outflow.
• loanable funds supplied.
• domestic investment.

19)

(C19) In the open-economy macroeconomic model, a higher U.S. real exchange rate makes

4 Points

• U.S. goods more expensive relative to foreign goods and reduces the quantity of dollars demanded.
• foreign goods more expensive relative to U.S. goods and reduces the quantity of dollars
• U.S. goods more expensive relative to foreign goods and reduces the quantity of dollars supplied.
• foreign goods more expensive relative to U.S. goods and reduces the quantity of dollars supplied

20)

(C20) When the money supply increases

4 Points

• interest rates rise and so aggregate demand shifts right.
• interest rates fall and so aggregate demand shifts right.
• interest rates fall and so aggregate demand shifts left.
• interest rates rise and so aggregate demand shifts left.

21)

(C20) The position of the long-run aggregate supply curve

4 Points

• is at the point where the unemployment rate is zero.
• is at the point where the economy would cease to grow.
• is determined by resource usage and technology.
• shifts to the right when the money supply increases.

22)

(C21) Other things the same, an increase in the price level makes the dollars people hold worth

4 Points

• more, so they can buy less.
• more, so they can buy more.
• less, so they can buy more.
• less, so they can buy less.

23)

(C21) An increase in the interest rate causes investment to

4 Points

• fall and the exchange rate to appreciate.
• rise and the exchange rate to depreciate.
• fall and the exchange rate to depreciate.
• rise and the exchange rate to appreciate.

24)

(C22) According to the Phillips curve, unemployment and inflation are negatively related in

4 Points

• the short run and in the long run.
• neither the long run nor the short run.
• the short run, but not in the long run.
• the long run, but not in the short run.

25)

(C22) The sacrifice ratio is the

4 Points

• inflation rate divided by the unemployment rate.
• sum of the inflation and unemployment rates.
• number of percentage points unemployment rises for each percentage point reduction in inflation.
• number of percentage points annual output falls for each percentage point reduction in inflation.