The people of a certain Mediterranean village always eat salad with balsamic vinegar and olive oil as dressing.

If the olive crop fails one year because of a terrible storm, what most likely would happen to the demand forbalsamic vinegar that the people of this village purchase?

• The demand forbalsamic vinegar purchased will decreasebecause it is a complementto olive oil.
• The demand forbalsamic vinegar purchased will increasebecause it is a complement to olive oil.
• The demand forbalsamic vinegar purchased will increasebecause vinegar and olive oil are substitutes.
• The demand forbalsamic vinegar purchasedwill decrease because it is a substitute for olive oil.

The president gives his annual State of the Union speech on television and discusses the loss of manufacturing jobs to China and the need for the United States to create more jobs in order to make up for this.

This describes which of the following types of unemployment?

• Cyclical
• Seasonal
• Frictional
• Structural

Which of the following would be true if demand became more inelastic?

• The consumer will receive more of the benefit of the subsidy.
• The producer will receive more of the benefit of the subsidy.
• PS will increase.
• QS will increase.

If one dollar can purchase 0.74 euros, what isthe exchange rate whenusing U.S.dollars as the base currency?

• 0.65
• 0.85
• 1.35
• 1.25

GDP is useful in evaluating which of the following?

• Increases in domestic consumption
• An economy of a country producing a significant amount abroad
• The quality of life or the well-being of a population
• The production of firms that are owned by domestic nationals butlocated overseas

Which of the following policy types can promote growth when the economy is showing signs of slowing?

• Both
• Monetary policy
• Fiscal policy
• Neither

Which statement below regarding monetary policy is false?

• Stable prices facilitate trade.
• Central banks aim for an inflation rate of 5%.
• We classify our money supply according to liquidity.
• Monetary policy should promote maximum stable employment.

Which of the following is NOT a way that the Fed prevents runs from happening?

• Ifreserves run low, the Fed will loan money to the private banks.
• The Fed ensures that these private banks have access to currency needed for depositors who wish to withdraw cash.
• Private banks rely on the Federal Government's oversightof theFederal Reserve's monetary policies.
• Private banks can choose to "hold" their reserves at regional Federal Reserve banks.

Money market mutual funds are an example of which of the following types of money?

• M0
• M1
• M2
• M3

Which statement below regarding the stagflation of the late 1970s/early 1980s is true?

• Disruptions in the oil supply caused the LRAS curve to move to the left.
• The Phillips curve represented the state of the economy at the time.
• Expansionary fiscal policies succeeded in lowering the unemployment rate.
• Expansionary fiscal policy led to double digit inflation.