Question 1

If the U.S.demand for British pounds increases,

Accepted Answer

A) the dollar price of a British pound will increase 
B) the dollar price of a British pound will decrease 
C) the exchange rate between dollars and pounds will be out of equilibrium 
D) the pound will fall in value against the dollar 
E) there will be no change in either the value of the dollar or the pound 
A) the dollar price of a British pound will increase 
B) the dollar price of a British pound will decrease 
C) the exchange rate between dollars and pounds will be out of equilibrium 
D) the pound will fall in value against the dollar 
E) there will be no change in either the value of the dollar or the pound

Question 2

A positive nominal interest rate indicates

Accepted Answer

A) how fast the number of dollars in your savings account is rising over time. 
B) how fast the purchasing power of your savings account is rising over time. 
C) the number of dollars in your savings account today. 
D) the purchasing power in your savings account today. 
A) how fast the number of dollars in your savings account is rising over time. 
B) how fast the purchasing power of your savings account is rising over time. 
C) the number of dollars in your savings account today. 
D) the purchasing power in your savings account today.

Question 3

Imagine that there are only two nations in the world,the United States and Mexico.If Americans buy more goods made in Mexico,other things constant,the

Accepted Answer

A) U.S.demand curve for Mexican pesos will shift rightward 
B) U.S.demand curve for Mexican pesos will shift leftward 
C) U.S.supply curve of Mexican pesos will shift leftward 
D) U.S.supply curve of Mexican pesos will shift rightward 
A) U.S.demand curve for Mexican pesos will shift rightward 
B) U.S.demand curve for Mexican pesos will shift leftward 
C) U.S.supply curve of Mexican pesos will shift leftward 
D) U.S.supply curve of Mexican pesos will shift rightward

Question 4

A decrease in the dollar price of the English pound will make

Accepted Answer

A) U.S.exports to England increase. 
B) U.S.exports less expensive for the English. 
C) imports from England more expensive for Americans. 
D) U.S.exports to England decrease. 
A) U.S.exports to England increase. 
B) U.S.exports less expensive for the English. 
C) imports from England more expensive for Americans. 
D) U.S.exports to England decrease.

Question 5

As the real interest rate in the domestic loanable funds market increases,

Accepted Answer

A) the cost of purchasing goods and services during the current period will decline. 
B) the net inflow of capital from abroad will increase. 
C) the inflationary premium will rise,and the money rate of interest will decline. 
D) the inflationary premium will fall,and the money rate of interest will rise. 
A) the cost of purchasing goods and services during the current period will decline. 
B) the net inflow of capital from abroad will increase. 
C) the inflationary premium will rise,and the money rate of interest will decline. 
D) the inflationary premium will fall,and the money rate of interest will rise.

Question 6

Which of the following helps explain why the aggregate demand curve slopes downward?

Accepted Answer

A) If the price level increases,the purchasing power of the fixed quantity of money decreases,causing people to buy less. 
B) If the price level increases,the purchasing power of the fixed quantity of money increases,causing people to buy more. 
C) If domestic prices increase,we substitute domestic goods for imported goods. 
D) If domestic prices decrease,we substitute imported goods for domestic goods. 
A) If the price level increases,the purchasing power of the fixed quantity of money decreases,causing people to buy less. 
B) If the price level increases,the purchasing power of the fixed quantity of money increases,causing people to buy more. 
C) If domestic prices increase,we substitute domestic goods for imported goods. 
D) If domestic prices decrease,we substitute imported goods for domestic goods.

Question 7

A trade surplus is when

Accepted Answer

A) imports are greater than exports of goods and services. 
B) exports are greater than imports of goods and services. 
C) imports are equal to exports of goods and services. 
D) there is a positive net inflow of foreign capital. 
A) imports are greater than exports of goods and services. 
B) exports are greater than imports of goods and services. 
C) imports are equal to exports of goods and services. 
D) there is a positive net inflow of foreign capital.

Question 8

Why do we use two supply curves in the aggregate goods and services market? What is the difference between them,and why do they have different slopes?

Accepted Answer

Aggregate supply is divided into two sup

Question 9

As the U.S.price level rises relative to price levels in other countries,what would happen in the U.S.?

Accepted Answer

A) consumption and net exports would decline 
B) consumption and net exports would increase 
C) consumption would increase and net exports would decrease 
D) consumption would decrease and net exports would increase 
E) consumption and net exports would remain constant 
A) consumption and net exports would decline 
B) consumption and net exports would increase 
C) consumption would increase and net exports would decrease 
D) consumption would decrease and net exports would increase 
E) consumption and net exports would remain constant

Question 10

As prices rise,people will buy fewer goods and services because

Accepted Answer

A) the interest rate has declined. 
B) aggregate demand has increased. 
C) the purchasing power of the fixed quantity of money has declined. 
D) the income of households has increased. 
A) the interest rate has declined. 
B) aggregate demand has increased. 
C) the purchasing power of the fixed quantity of money has declined. 
D) the income of households has increased.

Question 11

In the short run,an unexpected increase in prices will

Accepted Answer

A) reduce resource prices and increase the quantity of goods supplied. 
B) decrease the productive capacity of firms and decrease the quantity of goods supplied. 
C) increase the profits of firms,thereby leading them to expand output. 
D) increase the profits of firms,thereby leading them to reduce output. 
A) reduce resource prices and increase the quantity of goods supplied. 
B) decrease the productive capacity of firms and decrease the quantity of goods supplied. 
C) increase the profits of firms,thereby leading them to expand output. 
D) increase the profits of firms,thereby leading them to reduce output.

Question 12

Falling interest rates cause the market value of previously issued bonds to

Accepted Answer

A) rise. 
B) fall. 
C) remain unchanged. 
D) increase during periods of inflation but decline during periods of deflation. 
A) rise. 
B) fall. 
C) remain unchanged. 
D) increase during periods of inflation but decline during periods of deflation.

Question 13

If the dollar depreciates relative to the Peso,it can be said that

Accepted Answer

A) Mexican citizens no longer respect the United States. 
B) the dollar falls in value within the United States. 
C) it takes fewer dollars to buy Pesos. 
D) the Peso appreciates relative to the dollar. 
A) Mexican citizens no longer respect the United States. 
B) the dollar falls in value within the United States. 
C) it takes fewer dollars to buy Pesos. 
D) the Peso appreciates relative to the dollar.

Question 14

In the short run,if prices were below equilibrium,

Accepted Answer

A) excess aggregate demand for goods and services would place downward pressure on prices. 
B) excess aggregate supply of goods and services would place downward pressure on prices. 
C) excess aggregate demand for goods and services would place upward pressure on prices. 
D) excess aggregate supply of goods and services would place upward pressure on prices. 
A) excess aggregate demand for goods and services would place downward pressure on prices. 
B) excess aggregate supply of goods and services would place downward pressure on prices. 
C) excess aggregate demand for goods and services would place upward pressure on prices. 
D) excess aggregate supply of goods and services would place upward pressure on prices.

Question 15

Figure 9-3
  
-Suppose that British incomes rise relative to incomes in the United States.Then,in Figure 9-3

Accepted Answer

A) the demand curve will shift from D₁ to D₂ 
B) the demand curve will shift from D₂ to D₁ 
C) the supply curve will shift from S₁ to S₂ 
D) the supply curve will shift from S₂ to S₁ 
E) neither the demand for nor the supply curve will shift 
A) the demand curve will shift from D₁ to D₂ 
B) the demand curve will shift from D₂ to D₁ 
C) the supply curve will shift from S₁ to S₂ 
D) the supply curve will shift from S₂ to S₁ 
E) neither the demand for nor the supply curve will shift

Question 16

Within the aggregate demand/aggregate supply framework,the quantity produced and purchased in the goods and services market represents

Accepted Answer

A) nominal output or nominal GDP. 
B) the interest rate. 
C) real output or real GDP. 
D) the consumer price index. 
A) nominal output or nominal GDP. 
B) the interest rate. 
C) real output or real GDP. 
D) the consumer price index.

Question 17

In the context of aggregate supply,the long run is defined as the period during which

Accepted Answer

A) some prices are set by contracts and cannot be adjusted. 
B) prices can change,but neither aggregate supply nor aggregate demand can shift. 
C) individuals have sufficient time to modify their behavior in response to price changes. 
D) quantity changes cannot occur in response to changes in relative prices. 
A) some prices are set by contracts and cannot be adjusted. 
B) prices can change,but neither aggregate supply nor aggregate demand can shift. 
C) individuals have sufficient time to modify their behavior in response to price changes. 
D) quantity changes cannot occur in response to changes in relative prices.

Question 18

Which of the following properly describes the interest-rate effect of aggregate demand?

Accepted Answer

A) A higher price level leads to higher money demand,higher money demand leads to higher interest rates,a higher interest rate increases the quantity of goods and services demanded. 
B) A higher price level leads to higher money demand,higher money demand leads to lower interest rates,a higher interest rate reduces the quantity of goods and services demanded. 
C) A lower price level leads to lower money demand,lower money demand leads to lower interest rates,a lower interest rate reduces the quantity of goods and services demanded. 
D) A lower price level leads to lower money demand,lower money demand leads to lower interest rates,a lower interest rate increases the quantity of goods and services demanded. 
A) A higher price level leads to higher money demand,higher money demand leads to higher interest rates,a higher interest rate increases the quantity of goods and services demanded. 
B) A higher price level leads to higher money demand,higher money demand leads to lower interest rates,a higher interest rate reduces the quantity of goods and services demanded. 
C) A lower price level leads to lower money demand,lower money demand leads to lower interest rates,a lower interest rate reduces the quantity of goods and services demanded. 
D) A lower price level leads to lower money demand,lower money demand leads to lower interest rates,a lower interest rate increases the quantity of goods and services demanded.

Question 19

Resource prices that are fixed by long-term contracts help explain why,in the short run,firms will

Accepted Answer

A) increase output when product prices increase. 
B) keep production levels constant when product prices decrease. 
C) keep their product prices constant even if the demand for their good increases. 
D) keep their product prices constant even if the demand for their good decreases. 
A) increase output when product prices increase. 
B) keep production levels constant when product prices decrease. 
C) keep their product prices constant even if the demand for their good increases. 
D) keep their product prices constant even if the demand for their good decreases.

Question 20

Other things constant,if the cost of labor goes down,the profits of firms will

Accepted Answer

A) increase,and short-run aggregate supply will shift to the right. 
B) fall,and short-run aggregate supply will shift to the left. 
C) increase,and long-run aggregate supply will shift to the right. 
D) fall,and long-run aggregate supply will shift to the left. 
A) increase,and short-run aggregate supply will shift to the right. 
B) fall,and short-run aggregate supply will shift to the left. 
C) increase,and long-run aggregate supply will shift to the right. 
D) fall,and long-run aggregate supply will shift to the left.

Exam 9: Aan Introduction to Basic Macroeconomic Markets

If the U.S.demand for British pounds increases,

A positive nominal interest rate indicates

Imagine that there are only two nations in the world,the United States and Mexico.If Americans buy more goods made in Mexico,other things constant,the

A decrease in the dollar price of the English pound will make

As the real interest rate in the domestic loanable funds market increases,

Which of the following helps explain why the aggregate demand curve slopes downward?

A trade surplus is when

Why do we use two supply curves in the aggregate goods and services market? What is the difference between them,and why do they have different slopes?

As the U.S.price level rises relative to price levels in other countries,what would happen in the U.S.?

As prices rise,people will buy fewer goods and services because

In the short run,an unexpected increase in prices will

Falling interest rates cause the market value of previously issued bonds to

If the dollar depreciates relative to the Peso,it can be said that

In the short run,if prices were below equilibrium,

Figure 9-3 -Suppose that British incomes rise relative to incomes in the United States.Then,in Figure 9-3

Within the aggregate demand/aggregate supply framework,the quantity produced and purchased in the goods and services market represents

In the context of aggregate supply,the long run is defined as the period during which

Which of the following properly describes the interest-rate effect of aggregate demand?

Resource prices that are fixed by long-term contracts help explain why,in the short run,firms will

Other things constant,if the cost of labor goes down,the profits of firms will

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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