Provide answers to the following:
42. Which of the following monetary and scal policy combinations would most likelyresultinadeereaseinaggxegaledemand? We mm Mittendirt: (A) lower Buy bonds Inerease (B) Lower Buy bonds Decrease (C) Raise Sell bonds Increase (D) Raise Buy bonds Increase (E) Raise Sell bonds Decrease 43. Which of the following is true of supply shocks? (A) 'Iheytendtoehange bothrelativepricesandthegeneral priulevelinthe economy. (B) They affect only the general price level. (C) 111ey can be anticipated and offset with appropriate scal policy. (13} They can be mtioipated and offset with appropriate monetary policy. (E) They make the aggregate supply curve vertical. 44. Suppose that, from 1985 to 1986. unemployment fell from 7.2 to 7.0 percent and ination fell from 3.3 to 1.1 percent. An explanation of these changes might be that the (A) aggregate demand curve shifted to the left (B) aggregate demand curve shifted to the right (C) aggregm supply curve shifted to the left (D) aggregate supply curve shifted to the right (E) short-run Phillips curve shifted to the right 45. 46. Ifhigher United States interest rates cause foreign demand for the dollar to increase, which of the following will occur to the international value of the dollar and to United States exports? International Value M m (A) Increase Increase (B) Increase Decrease (C) Increase No change (D) Decrease Increase (E) Decrease Decrease The table below indicates the number of labor hours required in Countries X and Y to produce one unit of food or one unit of clothing. Country Food Clothing X 20 hours 50 hours Y ID hours 20 hours 48. An increase in the labor force participation rate will (A) increase investment and decrease savings (B) increase savings and decrease investment (C) have no effecton unemployment (D) make it easier to reduce unemployment (E) make it more difficult to reduce unemployment 49. Which of the following is a key feature of Keynesian economics? (A) The level of saving depends mostly on interest rates. (B) The level of government expenditure depends mostly on interest rates. (C) Supply creates its own demand. (D) Macroeconomic equilibrium can occur at less than full employment. (E) Wages are more exible than prices. 47. Given this information. which of the following statements is correct? (A) X has a comparative advantage in the production of both food and clothing. (B) Y has a comparative advantage in the production of both food and clothing. (C) X has a comparative advantage in food produaion. whereas Y has a comparative advantage in clothing production. (D) Y has a comparative advantage in food producuon. whereas X has a comparative advantage in clothing production. (E) Neither country has a comparative advantage in the production of either good. Which of the following groups of people would benet from unanticipated ination? I. Savers II. Borrowers III. lenders (A) Ion!!! (B) 11 only (C) 111 only to) I and u only (E) I and 111 only 50. If a large increase in total spending has no effect 51. on real gross domestic product. it must be true that (A) the price level is rising (B) the economy is experiencing high unemploy- mm (C) the spending multiplier is equal ml (D) the economy is in short-run equilibrium (E) aggregate supply has increased According to Keynesian theory. the most impor tant determinant of saving and consumption is the (A) interest rate (B) price level (C) level of income (D) level of employment (E) exibility of wages and prices
