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The net international investment position of the United States measures
A) U.S. holdings of foreign assets.
B) foreign holdings of U.S. assets.
C) U.S. holdings of foreign assets plus foreign holdings of U.S. assets.
D) U.S. holdings of foreign assets minus foreign holdings of U.S. assets.
If the number of automobile manufacturers decreases,
A) the demand for automobiles increases.
B) the demand for automobiles decreases.
C) the supply of automobiles increases.
D) the supply of automobiles decreases.
Which of the following is a correct sequence of events during an expansion?
A) Unemployment falls, income falls, tax revenue falls, unemployment benefits rise,
and the budget deficit falls.
B) Unemployment falls, income rises, tax revenue falls, unemployment benefits rise,
and the budget deficit rises.
C) Unemployment falls, income rises, tax revenue rises, unemployment benefits rise,
and the budget deficit falls.
D) Unemployment falls, income rises, tax revenue rises, unemployment benefits fall,
and the budget deficit falls.
Recall Application 3, "Increasing Health-Care Expenditures and Crowding Out," to
answer the following questions:
According to the application, the increase in the share of health-care spending to GDP
from the 1950s to 2000 is due to:
A) higher life expectancy.
B) a higher relative price of health-care relative to other goods and services.
C) a larger elderly population.
D) All of the above are correct.
Recall the Application about the possible link between the value of the U.S. dollar and
the worldwide increase in commodity prices to answer the following question(s).
Starting in the summer of 2010, there was a rise in prices of commodities such as oil
and food worldwide. Some economists suggested that monetary policy in the United
States was the cause of the worldwide commodity boom.According to this Application,
some economists noticed that the U.S. dollar ________ largely because monetary
policy in the United States had driven interest rates ________.
A) depreciated; down
B) depreciated; up
C) appreciated; down
D) appreciated; up
Suppose that a price index in Latvia was 120 in 2011 and 150 in 2012. The inflation
rate between those two years was approximately
A) 8 percent.
B) 12.5 percent.
C) 25 percent.
D) 30 percent.
Bill wants to borrow $100 from John. John wants to make 6% real return on his money,
so they both agree on a 6% interest rate paid next year. Neither anticipate the actual -2%
inflation rate next year. In this case:
A) Bill will pay 8% in real interest rate.
B) John is better off.
C) Bill will pay 6% in nominal interest rate.
D) all of the above
Suppose a bank has $8 million in deposits and a reserve ratio of 20 percent. Its required
reserves are
A) $40,000.
B) $400,000.
C) $1,600,000.
D) $16,000,000.
The most famous monetarist is:
A) Milton Friedman.
B) John Maynard Keynes.
C) Alan Greenspan.
D) Adam Smith.
If government spending is $900 billion while government revenue is $600 billion, the
government is said to have a
A) $300 billion budget surplus.
B) $300 billion budget deficit.
C) $1,500 billion budget deficit.
D) $600 billion budget deficit.
A perfectly competitive market is a market that has:
A) many buyers.
B) many sellers.
C) no single buyer or seller who can affect the price.
D) All of the above are correct.
