Question 1(Multiple Choice Worth 1 points)

(02.06 MC) Suppose Country 'X' is producing an output of 300 units of a certain good at $3 per unit in 2017. With time, the price level rises from $3 per unit to $5 per unit in 2018 while the amount of output produced remains same. Which of the following is true for the given situation?

The nominal GDP has decreased from 2017 to 2018. The real GDP has decreased from 2017 to 2018. The nominal GDP remains same for both years. The real GDP has increased from 2017 to 2018. The real GDP remains same for both years.

Question 2(Multiple Choice Worth 1 points)

(06.03 MC) Which one of the following cases is true if there is an increase in the demand for exports from the United States?

Increase in the equilibrium exchange rate Shift in the quantity of dollars supplied to the right Decrease in equilibrium exchange rate Exchange rate is unaffected Shift in the quantity demanded for foreign currency to the left

Question 3(Multiple Choice Worth 1 points)

(04.02 MC) If it is assumed that the nominal interest rate is 8% and the expected rate of inflation is 3%, what is the expected real interest rate?

5% 3% 5% 8% 11%

Question 4(Multiple Choice Worth 1 points)

(02.07 MC) Use the graph to answer the question that follows. Country 'P' is at point 'D' of the business cycle. As an economist, what steps would you suggest government authorities to take?

Central bank should sell more bonds to the public Decrease government spending Increase interest rates Increase minimum wage from the equilibrium level of the wage rate Raise government spending

Question 5(Multiple Choice Worth 1 points)

(01.06 MC) Use the graph to answer the question that follows. If the supply curve of automobiles in the market shifted from S1 due to an increase in the custom duty on imported car parts, then by what amount did the quantity of automobiles change from its original equilibrium level?

Q1 0 Q1 Q2 Q3 0 Q3 Q1 Q3 Q2

Question 6(Multiple Choice Worth 1 points)

(04.05 MC) Which of the following is true about the money supply curve in an economy?

The money supply adjusts automatically to any changes in the economy. The money supply curve is highly responsive to the liquidity preference of individuals. The money supply curve is horizontal. The money supply curve is perfectly inelastic, relative to the interest rate. The money supply curve is relatively inelastic, relative to the interest rate.

Question 7(Multiple Choice Worth 1 points)

(02.04 HC) Use the table to answer the question that follows.

Year	Price of X	Quantity of X	Price of Y	Quantity of Y
1	$8	5	$9	7
2	$5	5	$7	7

The economy produced only two goods with the prices and quantities of each good for year 1 and year 2 shown in the table. Which of the following describes the state of the economy in year 2?

The economy is going through a deflation, and the nominal GDP has decreased. The economy is going through an inflation, and the nominal GDP has increased. The economy is going through a disinflation, and the nominal GDP has decreased. The economy is going through a stagflation, and the nominal GDP has increased. The economy is going through a deflation, and the nominal GDP has increased.

Question 8(Multiple Choice Worth 1 points)

(02.01 LC) Which of the following is true about nominal GDP?

Base year output divided by current year prices Base year prices times current year output Current year output divided by base year prices Current year prices times base year output Current year prices times current year output

Question 9(Multiple Choice Worth 1 points)

(02.03 MC) 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?

Since Liza is not a part of the labor force, the unemployment rate is not affected by her employment status. The unemployment rate is over-estimated. The unemployment rate is under-estimated. The unemployment rate always displays the true position of unemployment in the country. The unemployment rate is not adjusted downward for people who are not looking for job.

Question 10(Multiple Choice Worth 1 points)

(05.04 MC) Which of the following statements about deficits and debt is true?

If the government run a fiscal surplus, it will increase its external debt. Interest payments on the national debt can limit other spending options that the government might have. Government represents the sum of all borrowing by banks from the central bank, minus any repayments. When economy-wide interest rates increase, the value of outstanding debt increases. In most developed countries, foreigners are prohibited from owning the country's bonds or debt.

Question 11(Multiple Choice Worth 1 points)

(03.02 MC) Assume that the government of a country decides to give out tax refunds of $4.5 million to small domestic firms that are struggling. If the marginal propensity to save in the country is 0.25, then what is the maximum impact this measure will have on the GDP of the country?

$1.5 million decrease in GDP $7.5 million decrease in GDP $7.5 million increase in GDP $13.5 million decrease in GDP $13.5 million increase in GDP

Question 12(Multiple Choice Worth 1 points)

(03.01 LC) Which of the following is represented by the negative slope of the aggregate demand curve?

A decrease in the exchange rate leads to more exports than imports A decrease in the price level encourages consumers to buy more imported goods An increase in the interest rate positively affects the investment demand An increase in the interest rate reduces the demand for money An increase in the price level makes people spend more

Question 13(Multiple Choice Worth 1 points)

(03.08 MC) Which of the following is the result of an economy implementing a contractionary fiscal policy?

The aggregate demand curve will shift to the left. The aggregate demand curve will shift to the right. The economy will experience a crowding-out effect. The government will increase its spending on education. The tax rates in the economy will decrease.

Question 14(Multiple Choice Worth 1 points)

(05.05 LC) In macroeconomics, "crowding out" is apt to have which effect on the economy in the long run?

An increase in the natural rate of unemployment A lower real interest rate A lower level of full-employment real GDP Increased private sector investment A lower level of inflation

Question 15(Multiple Choice Worth 1 points)

(06.02 MC) Use the graph to answer the question that follows. This graph shows the competitive foreign exchange market for dollars. If initially the price of a dollar is 0.90 euro, which of the following is true?

There is an excess demand for dollars, and the dollar will appreciate in value. There is an excess supply of dollars, and the exchange rate will move to 0.80 euro per dollar, with the dollar depreciating and the euro appreciating. There will be an excess supply of dollars, and the euro will depreciate as the exchange rate falls to 0.80 euro per dollar. There will be an excess supply of euros, and the euro will depreciate. The demand for dollars should increase until the equilibrium exchange rate is 0.90 euro per dollar.

Question 16(Multiple Choice Worth 1 points)

(04.07 MC) Use the graph to answer the question that follows. If the economy of a country experiences increased capital inflows from abroad due to some favorable economic conditions, then other things being constant, what is the new real interest rate, equilibrium quantity of loanable funds, and equilibrium point in the loanable funds market?

The new interest rate is 7%, the new equilibrium quantity is $1,600, and the new point of equilibrium is o prime prime. The new interest rate is 7%, the new equilibrium quantity is $1,700, and the new point of equilibrium is o prime prime. The new interest rate is 7%, the new equilibrium quantity is $1,700, and the new point of equilibrium is o prime. The new interest rate is 8%, the new equilibrium quantity is $1,600, and the new point of equilibrium is o prime. The new interest rate is 8%, the new equilibrium quantity is $1,700, and the new point of equilibrium is o prime.

Question 17(Multiple Choice Worth 1 points)

(05.07 MC) Which one of the following public policies promotes economic growth in the country?

Capital formation by borrowing from foreign nations Government giving unemployment benefits Government spending on welfare programs Increase in the personal income tax Reduction in government regulation

Question 18(Multiple Choice Worth 1 points)

(05.06 LC) How is economic growth best described or summarized?

An increase in the current level of real GDP A decrease in the unemployment rate An increase in the long-run aggregate supply curve An inward (or leftward) shift of the Phillips curve An inward shift of the production possibilities frontier

Question 19(Multiple Choice Worth 1 points)

(06.04 HC) The government of country B follows an expansionary fiscal policy by increasing government spending. What will the immediate (short-run) impact of such a move be on the foreign exchange rate?

The currency of country B depreciates against the currency of other countries, due to a decrease in interest rates as a result of large government spending. The currency of country B appreciates against the currency of other countries, due to an increase in interest rates as a result of large government spending. The currency of country B appreciates against the currency of other countries, due to a decrease in interest rates as a result of large government spending. The currency of country B depreciates against the currency of other countries, due to an increase in interest rates as a result of large government spending. The currency of country B remains at the same value as against the currency of other countries, regardless of an increase in interest rates as a result of large government spending.

Question 20(Multiple Choice Worth 1 points)

(03.05 MC) Which of the following is true if the economy is in long run equilibrium?

There is an inflationary output gap in the economy. There is a deflationary output gap in the economy. Equilibrium is unstable and will go on fluctuating. There is full employment in the economy. Full employment level is not achievable in the long run.

Question 21(Multiple Choice Worth 1 points)

(05.03 MC) Assume that the money supply increases at a rate that exceeds the long-run growth of real GDP. Which of the following should occur?

The natural rate of unemployment will decrease. Inflationary expectations will decrease. There will be an increase in the economy's price level. The velocity of money will increase. There will be an increase in cyclical unemployment.

Question 22(Multiple Choice Worth 1 points)

(05.06 MC) With the advancement in technology and an increase in labor productivity, the output of an economy increases. How is this phenomenon analogous to the outward shift of the long-run aggregate supply curve?

The decrease in output shifts the production possibility curve outwards and is similar to the rightward shift in the long-run aggregate supply curve. The increase in output shifts the production possibility curve inwards and is similar to the rightward shift in the long-run aggregate supply curve. The increase in output shifts the production possibility curve outwards and is similar to the rightward shift in the long-run aggregate supply curve. The decrease in output shifts the production possibility curve outwards and is similar to the leftward shift in the long-run aggregate supply curve. The increase in output shifts the production possibility curve outwards and is similar to the leftward shift in the long-run aggregate supply curve.

Question 23(Multiple Choice Worth 1 points)

(01.03 MC) Suppose Firm A can manufacture 100 pens and 20 umbrellas with a unit of labor, and Firm B can manufacture 80 pens and 10 umbrellas with a unit of labor. Which one of the following statements is true?

Firm A has the comparative advantage in both pen and umbrella production. Firm B has an absolute advantage in umbrella production. Firm A has a comparative advantage only in pen production. Firm B has a comparative advantage in pen production. Neither firm has a comparative advantage in either pen or umbrella production.

Question 24(Multiple Choice Worth 1 points)

(01.06 MC) If it is assumed that the market for good Z is in equilibrium and Z is an inferior good, what will be the result following an increase in the average income of consumers?

A decrease in the equilibrium price of good Z and a decrease in the equilibrium quantity of good Z. An increase in the equilibrium price of good Z and an increase in the equilibrium quantity of good Z. An increase in the equilibrium price of good Z and a decrease in the equilibrium quantity of good Z. Since the demand for an inferior good must be perfectly inelastic, there will be no change in quantity; price may increase or decrease. An increase in equilibrium quantity with an indeterminate impact on the equilibrium price.

Question 25(Multiple Choice Worth 1 points)

(02.06 MC) Considering 2017 prices as the base year prices, the price of good x in 2017 was $2, and 200 units of x were produced. In 2018, the price of good x was raised to $4, and 150 units of x were produced. Which of the following is true about the real GDP?

The impact on the real GDP cannot be determined. The percentage decrease in the real GDP is 25%. The percentage increase in the real GDP is 25%. The percentage increase in the real GDP is 50%. The real GDP remains constant.

Question 26(Multiple Choice Worth 1 points)

(01.02 MC) Suppose the PPC of a producer producing two goods, A and B, is a straight line. Which of the following is true regarding the opportunity cost for the producer?

For every extra unit of A produced, the producer does not give up any of B. For every extra unit of A produced, the producer gives up less of B. For every extra unit of A produced, the producer gives up more of B. For every extra unit of A produced, the producer gives up the same amount of B. For every extra unit of A produced, the producer is able to produce more of B.

Question 27(Multiple Choice Worth 1 points)

(06.01 LC) What does a deficit in capital account reflect for a domestic country in the international market?

A deficit in capital account shows that more money is coming into the country when compared to what it is spending. A deficit in capital account shows that more money is flowing out of the country when compared to what it is receiving. A deficit in capital account shows the net deficit in the country's balance of payment irrespective of the current account performance. The capital account is always balanced, so there can never be an economic condition that will create an deficit. The deficit in the capital account pertains to more investment from the rest of the world than it does to the domestic country.

Question 28(Multiple Choice Worth 1 points)

(05.03 MC) Assume that the money supply is $1,000, the price level is 2.0, and real GDP is $4,000. What is the value of the velocity of money?

Indeterminate 2.0 8.0 2,000 8,000

Question 29(Multiple Choice Worth 1 points)

(05.02 MC) Assume that the citizens of a country decide to save more and consume less due to a natural disaster. How does the movement along the short-run Phillips curve get affected, due to the demand shock in a country?

The negative demand shock causes a downward movement along the short-run Phillips curve. The negative demand shock causes a rightward shift of the short-run Phillips curve. The negative demand shock causes an upward movement along the short-run Phillips curve. The positive demand shock causes a rightward shift of the short-run Phillips curve. The positive demand shock causes an upward movement along the short-run Phillips curve.

Question 30(Multiple Choice Worth 1 points)

(03.03 MC) Which of the following is true about the upward-sloping, short-run supply curve?

Firms do not change their prices in the short run because costs of changing prices add up. Individual firms do not misinterpret and tend to produce less given increased prices. Prices are flexible and change very fast in the short run economy. The wealth effect ensures an upward-sloping SRAS curve. Wages immediately reflect a rise in the prices in the short run.

Question 31(Multiple Choice Worth 1 points)

(03.09 LC) How do transfer payments in the form of unemployment compensation work as an automatic fiscal stabilizer during a recession?

Transfer payments boost the oscillation in the business cycle. Transfer payments decrease the government expenditure that helps in controlling the recession. Transfer payments increase government spending that, in turn, decreases disposable income. Transfer payments lead to a rise in tax revenue that further boosts the money supply in an economy. Transfer payments work as income supports and reduce the effects of the recession.

Question 32(Multiple Choice Worth 1 points)

(06.06 MC) Assume that the real interest rate falls in Country Y. Which of the following will occur?

There will be an inflow of investment funds to Country Y and a depreciation of Country Y's currency. There will be an outflow of investment funds from Country Y to other countries and a depreciation of Country Y's currency. There will be an outflow of funds from other countries to Country Y, increasing the demand for Country Y's currency. Residents of Country Y will no longer invest funds in other countries, limiting their investment to opportunities in Country Y. There will be an increased demand for the currency of Country Y, an appreciation of its currency, and a reduction in net exports from Country Y.

Question 33(Multiple Choice Worth 1 points)

(04.07 MC) Suppose a closed economy has a national income of $260 million and $535 million in private savings. Which figure would you need to calculate national savings?

government expenditures tax revenues household consumption net capital inflows gross domestic product

Question 34(Multiple Choice Worth 1 points)

(03.08 LC) Which of the following is a constraint to discretionary fiscal policy?

Discretionary fiscal policy that is expansionary can only affect frictional unemployment by reducing cyclical unemployment. Discretionary fiscal policy will only affect aggregate supply leaving aggregate demand unchanged. Discretionary fiscal policy has lags in its effectiveness with time needed to recognize the problem and to carry out policy solutions. Discretionary fiscal policy can only be used to address unemployment, with no ability to affect the price level. Discretionary fiscal policy that is expansionary tends to reduce interest rates and overstimulate investment.

Question 35(Multiple Choice Worth 1 points)

(05.01 MC) Assume that an economy is using an expansionary fiscal policy and an expansionary monetary policy. Which of the following is true about the economy's situation?

The economy has a decreased savings rate. The economy is experiencing a negative output gap. The economy is experiencing a positive output gap. The economy is operating at the full employment level. The economy is suffering from increased price levels.

Question 36(Multiple Choice Worth 1 points)

(04.05 MC) Use the graph to answer the question that follows. In this graph, the demand for money shifted from MD to MD. Which of the following could have caused this shift?

A decrease in aggregate demand in the economy A decrease in the nominal interest rate A decrease in the precautionary demand for money An increase in average income of households An increased preference to hold other assets, like stocks and bonds

Question 37(Multiple Choice Worth 1 points)

(03.08 MC) Assume that an economy is experiencing a situation in which investors are not investing because of uncertainty of their future profits. Which of the following actions should the government take to get the economy back on track?

The government should sell a part of its equity. The government should impose higher taxes on the wealthy. The government should increase its spending. The government should increase taxes on heavy industries. The government should increase the reserve ratio of banks.

Question 38(Multiple Choice Worth 1 points)

(04.05 MC) Assume that the money market is in equilibrium, with a nominal interest rate of ro. Following a decrease in aggregate demand within the economy, which of the following should occur?

The money demand curve will shift right (increase), and the interest rate will decrease. The money supply curve will shift left (decrease), and the interest rate will increase. The money demand curve will shift left (decrease), and the interest rate will decrease. There will be an increase in the equilibrium quantity of money, with an indeterminate impact on the nominal interest rate. The money demand will increase, the money supply will decrease, and the interest rate will increase.

Question 39(Multiple Choice Worth 1 points)

(04.03 LC) The basic money supply, M1, is defined as the value of

currency in circulation plus bank reserves demand deposits plus savings accounts currency in circulation plus existing government bonds currency in circulation plus demand deposits currency in circulation, plus demand deposits, plus saving accounts

Question 40(Multiple Choice Worth 1 points)

(04.04 MC) Which of the following would effectively increase the money multiplier?

An increase in cash drain to the public A decrease in the required reserve ratio An increase in the excess reserves held by commercial banks An increase in interest rates in the economy A decrease in the marginal propensity to consume

Question 41(Multiple Choice Worth 1 points)

(03.06 MC) What happens when a country experiences a positive demand shock in the short run?

Output increases, unemployment decreases, and the price level increases. Output increases, unemployment increases, and the price level increases. Output increases, unemployment decreases, and the price level decreases. Output increases, unemployment decreases, and the price level remains constant. Output increases, unemployment remains constant, and the price level decreases.

Question 42(Multiple Choice Worth 1 points)

(03.04 MC) Which of the following would lead to a rightward or outward shift in the long-run aggregate supply curve (LRAS)?

An increase in business taxes A lower labor force participation rate An increase in the depreciation of existing capital An increase in the price of a key input, like oil An increase in the rate of savings and capital formation

Question 43(Multiple Choice Worth 1 points)

(03.03 MC) Use the graph to answer the question that follows. Comparing points A and B on this graph, which of the following is true?

At point B, there would be less employment and higher unemployment than at point A. At point B, there would be a lower wage than at point A. At point B, there is a higher price level that increases the quantity of real GDP supplied. At point A, there is greater pressure on the price level and inflation than at point B. At point A, with a lower wage rate, aggregate supply has decreased compared to point B.

Question 44(Multiple Choice Worth 1 points)

(05.01 MC) Which of the following best explains the effect of a contractionary fiscal and monetary policy on the aggregate demand of an economy?

The aggregate demand decreases, due to a decrease in taxes and reserve requirements. The aggregate demand decreases, due to an increase in taxes and reserve requirements. The aggregate demand increases, due to an increase in taxes and reserve requirements. The aggregate demand remains unaffected, due to decreases in taxes and reserve requirements. The aggregate demand remains unaffected, due to increases in taxes and reserve requirements.

Question 45(Multiple Choice Worth 1 points)

(02.03 MC) Sarah and Jackson are working in a firm. Due to automation in the manufacturing process, Jackson lost his job. After some time, the economy is hit hard by recession, and the firm also laid off Sarah. Now, Sarah and Jackson are both unemployed. Which of the following is true for the above scenario?

Jackson is cyclically unemployed, and Sarah is structurally unemployed. Jackson is structurally unemployed, and Sarah is frictionally unemployed. Sarah and Jackson both are cyclically unemployed. Sarah is cyclically unemployed, and Jackson is structurally unemployed. Sarah is frictionally unemployed, and Jackson is structurally unemployed.

Question 46(Multiple Choice Worth 1 points)

(03.02 MC) If the marginal propensity to save is 0.4 (or 40%) and the government plans to spend $4,000 in the economy, then what will be the change in national income as a whole?

The national income will increase by $10,000. The national income will increase by $25,000. The national income will decrease by $10,000. The national income will decrease by $25,000. The national income will remain constant.

Question 47(Multiple Choice Worth 1 points)

(02.05 MC) Which of the following is true for an unexpected inflation rate?

A loan at an interest rate that is indexed to the inflation rate will be better off in the case of unexpected inflation. An investor who has just invested in a government bond that pays him a fixed amount will be better off. Emily borrows the money from a bank at a fixed interest rate and will be better off because of unexpected inflation. John is receiving $2,000 per month from his internship and is better off regardless of the inflation rate. Workers working in a firm are better off when they receive a 3% increase in wages if inflation unexpectedly rises by 5%.

Question 48(Multiple Choice Worth 1 points)

(04.01 MC) Which of the following is true about stocks as a liquid financial asset?

Stocks are always non-transferable. Stocks are not the same as equities. Stocks do not give ownership in a firm. Stocks do not have any resale value. Stocks give profits in the form of capital gains and dividends.

Question 49(Multiple Choice Worth 1 points)

(02.02 LC) Economists argue that GDP is underestimated as a result of which of the following?

The sale of second-hand or used goods is not counted in current GDP. Transfer payments are not counted in current GDP. The sale of equities or shares of stock are not counted in current GDP. Home production of goods and services is not counted in GDP. GDP does not include a measure of income inequality.

Question 50(Multiple Choice Worth 1 points)

(04.07 MC) If an economy is experiencing equilibrium in the loanable funds market with an 8% interest rate, what are the consequences if the interest rate falls to 6%?

At lower interest rates, households will be willing to save more, and firms will be willing to invest more. At lower interest rates, households will be willing to save more, and firms will be willing to invest less. At lower interest rates, households will be willing to spend less, and firms will not be willing to invest more. At lower interest rates, households will be willing to spend less, and firms will be willing to invest more. At lower interest rates, households will be willing to spend more, and firms will be willing to invest more.

Question 51(Multiple Choice Worth 1 points)

(01.06 HC) Use the graph to answer the question that follows. Which of the following is responsible for the change in demand and supply of silk shirts from X1 to X2?

Increase in the popularity of silk shirts and introduction of new government subsidies for the sericulture (silk) industry Increase in the popularity of satin shirts and introduction of new government subsidies for the sericulture (silk) industry Decrease in consumers' income and improvement in weaving machinery Increase in the popularity of silk shirts and introduction of new government subsidies for the cotton industry Increase in consumers' income and the popularity of satin shirts

Question 52(Multiple Choice Worth 1 points)

(05.02 MC) Use the graph to answer the question that follows. In the accompanying graph, the long-run Phillips curve has shifted from LR to LR. Which of the following could explain this shift?

Expansionary fiscal policy that reduces unemployment and increases inflation A lower expected rate of inflation The economy moving, reaching full employment, with real GDP corresponding to long-run aggregate supply More efficient labor markets that reduce frictional unemployment and the natural rate of unemployment An inward shift in short-run aggregate supply that increases cyclical unemployment

Question 53(Multiple Choice Worth 1 points)

(05.05 MC) Which of the following policy measures can lead to a crowding-out effect in an economy that has a budget deficit?

Decreasing the government spending Increasing the government spending Increasing the taxes for households The central bank decreasing reserve ratio The central bank selling bonds

Question 54(Multiple Choice Worth 1 points)

(04.06 MC) Achieving the maximum increase in the money supply, for a given money multiplier, is slowed when

the general public redeposits all cash proceeds of expenditures from loans the central bank lowers the discount rate the legislature increases government spending the banks have financially strong customers seeking loans the banks tend to lend slowly, holding excess reserves

Question 55(Multiple Choice Worth 1 points)

(06.05 HC) Assume that a country X engages in activities that lead to a depreciation of its currency. What is the impact of currency depreciation on net exports of a country?

Currency depreciation will not affect the exports but will affect the imports of a country. Demand for imports from abroad increases. Net exports will fall. Net exports will remain unchanged. The net exports will rise.

Question 56(Multiple Choice Worth 1 points)

(04.06 MC) Assume that an economy is going through a slump and is experiencing less than ideal output levels and a decreased national income. In a banking system with ample reserves, which one of the following actions can a central bank take in order to fix the economy?

The central bank advises the government to increase taxes. The central bank increases the discount rate for commercial banks. The central bank increases the reserve ratio of commercial banks. The central bank of the country lowers its administered interest rates. The central bank of the country sells securities via open market operations.

Question 57(Multiple Choice Worth 1 points)

(05.04 MC) Which of the following best explains the difference between a government debt and a budget deficit?

A deficit occurs when government spending exceeds tax revenue in a financial year, and the government debt is the deficit accumulated over many years. A deficit occurs when government spending exceeds tax revenue in a financial year, and the government debt is the deficit accumulated at the end of the year. A deficit occurs when government spending exceeds transfer payments in a financial year, and the government debt is the deficit accumulated over many years. A deficit occurs when government spending is less than tax revenue in a financial year, and the government debt is the deficit accumulated over many years. A deficit occurs when tax revenue is less than transfer payments in a financial year, and the government debt is the deficit accumulated at the end of the year.

Question 58(Multiple Choice Worth 1 points)

(06.03 MC) A much larger number of international students from Europe are planning to study in the United States. Which of the following statements concerning foreign exchange is true?

The demand for euros will increase. The demand for U.S. dollars will increase. The money spent in travel and educational expenses does not affect the demand or supply of foreign exchange in the foreign exchange market. The supply of euros will decrease. The supply of U.S. dollars will decrease.

Question 59(Multiple Choice Worth 1 points)

(03.07 HC) Use the graph to answer the question that follows. An economy attained a long-run equilibrium at point A. How does the price adjust in the long run when the aggregate demand rises from AD1 to AD2 to bring the economy back to its natural rate?

The output increases, and the price gradually reaches point A from its value at point C. The price decreases and gradually reaches the long-run equilibrium at point A. The price does not adjust. In the long-run, the output adjusts and reaches the equilibrium point. The price increases and gradually decreases the output. That returns the economy to its natural rate from point C to A. The price increases, and the output gradually returns to its natural rate from point B to C.

Question 60(Multiple Choice Worth 1 points)

(05.07 MC) Which among the following is a supply-side fiscal policy for economic growth?

Devaluation of currency Increasing tax rates Increase in the privatization within the country Decreasing the money supply in the economy Monetary policies like cutting interest rates