Which of the following policies would most likely increase the money supply?
a. Selling government bonds
b. Raising the discount rate
c. Lowering tax rates
d. Lowering the required reserve ratio
e. Decreasing the prime lending rate
If private investment increased by $50 billion while GDP remained the same, which of
the following could have occurred, all else being the same?
a. Consumption spending decreased by $50 billion
b. Exports increased by $50 billion
c. Imports decreased by $50 billion
d. Net exports increased by $50 billion
e. Government spending increased by $50 billion
Which of the following changes would cause a movement along the U.S. demand curve
for a foreign currency?
a. An increase in U.S. real GDP
b. A fall in U.S. real GDP
c. A rise in the U.S. interest rate
d. A change in the exchange rate
e. An expectation that the exchange rate is going to fall.
If the U.S. interest rate falls while the British interest rate remains constant, which of
the following will happen in the market for pounds?
a. A rightward shift of the demand curve, a leftward shift of the supply curve, and an
appreciation of the pound
b. A leftward shift of the demand curve, a rightward shift of the supply curve, and an
appreciation of the pound
c. A leftward shift of the demand curve, a leftward shift of the supply curve, and a
depreciation of the pound
d. A rightward shift of the demand curve, a rightward shift of the supply curve, and an
appreciation of the pound
e. A leftward shift of the demand curve, a rightward shift of the supply curve, and a
depreciation of the pound.
Inflation imposes a cost on society by directly decreasing average real income in the
economy.
If U.S. goods became less desirable to the British, there would be
a. a rightward movement along the supply of British pounds curve in the dollar-pound
market
b. a leftward movement along the supply of British pounds curve in the dollar-pound
market
c. a rightward shift of the supply of British pounds curve in the dollar-pound market
d. a leftward shift of the supply of British pounds curve in the dollar-pound market
e. no change in the supply of British pounds curve in the dollar-pound market
If you know the number of euros that can be exchanged for one dollar, you can easily
figure out the number of dollars needed to obtain one euro by finding the reciprocal of
the exchange rate for dollars per euro.
If a firm bakes cookies and sells them for $1,000 while spending $100 on sugar, $150
on chocolate, $50 on other supplies, $300 on wages and $400 on rent, what is its value
added?
a. $300
b. $0
c. $700
d. $200
e. $400
Which of the following would lead to a decrease in autonomous consumption
spending?
a. a decrease in disposable income
b. an increase in disposable income
c. an increase in the interest rate
d. more optimistic expectations about future income
e. an increase in wealth
An increase in the cost of acquiring human capital will shift the labor supply curve to
the left; eventually, this will tend to increase the equilibrium wage rate.
In only one of the following situations is a nation’s standard of living certain to
increase. Which one?
a. Real GDP rises faster than population.
b. Real GDP rises faster than the price level.
c. Real GDP rises.
d. Real GDP rises faster than the number of people employed.
e. Real GDP rises faster than the number of people unemployed.