Question 11 Liza is currently unemployed and stopped her job search six months back. Considering Liza's employment status, which of the following is true about the unemployment rate?

A) Since Liza is not a part of the labor force, the unemployment rate is not affected by her employment status.

B) The unemployment rate is over-estimated.

C) The unemployment rate is under-estimated.

D) The unemployment rate always displays the true position of unemployment in the country.

E) The unemployment rate is not adjusted downward for people who are not looking for job.

Question 12 Which of the following policy combinations will be most effective in reducing a high rate of inflation?

A) Central bank selling government bonds and increasing income taxes

B) Increasing government spending, and the central bank buying government bonds

C) Central bank increasing the discount rate and reducing government spending

D) Increasing government spending and increasing taxes by equal amounts

E) Central bank selling government bonds and increasing government spending

Question 13 Assume that the money supply in an economy is $900 million, the velocity of money is constant at 5, and the price per unit of output is $3. What is the real and the nominal GDP?

A The real GDP is $1,500 million, and the nominal GDP is $3,500 million.

B The real GDP is $1,500 million, and the nominal GDP is $4,500 million.

C The real GDP is $1,600 million, and the nominal GDP is $4,500 million.

D The real GDP is $3,500 million, and the nominal GDP is $700 million.

E The real GDP is $4,500 million, and the nominal GDP is $1,500 million.

Question 14 Which of the following represents a credit on the current account (CA) of country A?

A Citizens of country A travel to neighboring country B.

B Country A imports furniture from country C.

C Country A's citizens buy government bonds from country F.

D A firm in country A builds a new factory in country G.

E Country A exports computers to firms in country H.

Question 15

Use the graph to answer the question that follows.

Use the data table to answer the question that follows. Exports $550 billion Imports $350 billion Bonds purchased from abroad $250 billion Financial capital inflow $50 billion From the data given in the table, which one of the following statements is true?Nominal Interest Rate, r MD' MD Quantity of Money ($)Price Level SRAS P2 P1 Y1 Y2 Real GDP