BUS 805 Quiz 2 | Course Paper

Unlock access to all the studying documents.

View Full Document

What factors are not important in determining exchange rate fluctuations in the long

run?

A) relative price levels across countries

B) relative rates of productivity growth across countries

C) preferences for domestic and foreign goods across countries

D) speculating in currency markets

Table 2-4

Table 2-4 shows the output per day of two gardeners, George and Jack. They can either

devote their time to mowing lawns or cultivating gardens.

Refer to Table 2-4. Which of the following statements istrue?

A) Jack has a comparative advantage in both tasks.

B) George has a comparative advantage in both tasks.

C) Jack has a comparative advantage in lawn mowing and George in garden cultivating.

D) Jack has a comparative advantage in garden cultivating and George in lawn mowing.

The quantity theory of money assumes that

A) the velocity of money is negative.

B) the velocity of money is constant.

C) the velocity of money is zero.

D) the velocity of money fluctuates unpredictably.

Under which of the following circumstances would private saving be positive in a

closed economy?

A) Y = $10 trillion

C = $5 trillion

TR = $2 trillion

G = $2 trillion

public saving = $1 trillion

B) Y = $9 trillion

C = $5 trillion

TR = $1 trillion

G = $1 trillion

public saving = $3 trillion

C) Y = $8 trillion

C = $2 trillion

TR = $4 trillion

G = $2 trillion

public saving = $4 trillion

D) Y = $6 trillion

C = $2 trillion

TR = $8 trillion

G = $3 trillion

public saving = $1 trillion

Suppose the government spending multiplier is 2. The federal government cuts

spending by $40 billion. What is the change in GDP if the price level is not held

constant?

A) an increase of less than $80 billion

B) an increase equal to $80 billion

C) an increase of greater than $80 billion

D) a decrease of less than $80 billion

E) a decrease of more than $80 billion

Figure 12-1

Refer to Figure 12-1. According to the figure above, at what point is aggregate

expenditure greater than GDP?

A) J

B) K

C) L

D) none of the above

Table 15-1

Refer to Table 15-1. The hypothetical information in the table shows what the values

for real GDP and the price level will be in 2015 if the Fed does not use monetary

policy. Which of the following policies makes sense if the Fed wants to keep real GDP

at its potential level in 2015?

1. A) The trading desk should sell Treasury securities.

2. B) The Fed should lower the target for the federal funds rate.

3. C) The Fed should pursue contractionary policy.

4. D) The Fed should lower capital gains taxes.

Table 8-20

Refer to Table 8-20. Given the following information, calculate the rate of increase in

the price level from 2012 to 2013.

A) 8.6%

B) 7.9%

C) -7.9%

D) -8.6%

Figure 10-6

Refer to Figure 10-6. The loanable funds market is in equilibrium, as shown in the

figure above. An increase in the supply of loanable funds could result in which of the

following combinations of the real interest rate and quantity of loanable funds at a new

equilibrium?

A) The real interest rate is 5 percent, and the quantity of loanable funds is $150 million.

B) The real interest rate is 5 percent, and the quantity of loanable funds is $90 million.

C) The real interest rate is 3 percent, and the quantity of loanable funds is $150 million.

D) The real interest rate is 3 percent, and the quantity of loanable funds is $90 million.

How does the decreasing use of DVD players affect the market for prerecorded DVDs?

A) The demand curve for prerecorded DVDs shifts to the right.

B) The quantity of prerecorded DVDs demanded decreases.

C) The quantity of prerecorded DVDs demanded increases.

D) The demand curve for prerecorded DVDs shifts to the left.

Which of the following is not one of the four main categories of spending identified by

John Maynard Keynes?

A) consumption

B) planned investment

C) government purchases

D) transfer payments

The demand for loanable funds has a ________ slope because the lower the interest

rate, the ________ number of investment projects are profitable, and the ________ the

quantity of loanable funds demanded.

A) negative; greater; greater

B) negative; greater; lesser

C) negative; lesser; greater

D) positive; lesser; lesser

Discouraged workers are

A) workers who have a part time job but want a full time job.

B) workers who find their current jobs unfulfilling and are considering a job change.

C) workers who have consistently been looking for work for more than 4 weeks.

D) workers who have stopped looking for work because they believe there are no jobs

for them.

An equal increase in government purchases and taxes will cause

A) an increase in real GDP.

B) no change in real GDP.

C) an increase in the budget surplus.

D) a reduction in cyclically adjusted budget surplus.

Currency traders expect the value of the dollar to rise. What effect will this have on the

demand for dollars and the supply of dollars in the foreign exchange market?

A) Demand for dollars will increase, and supply of dollars will decrease.

B) Demand for dollars will increase, and supply of dollars will increase.

C) Demand for dollars will decrease, and supply of dollars will increase.

D) Demand for dollars will decrease, and supply of dollars will decrease.