A decrease in Japanese real interest rates causes the dollar to _____________ which
tends to _______________ U.S. Real GDP.
a. appreciate; raise
b. appreciate; lower
c. depreciate; raise
d. depreciate; lower
Countries that engage in specialization and trade can consume at a level beyond their
production possibilities frontier.
a. True
b. False
If the (average) tax rate falls by 20% and as a result the tax base rises by 20%, tax
revenues will
a. rise.
b. decline.
c. remain unchanged.
d. There is not enough information given to answer this question.
According to the simple quantity theory of money in the AD-AS framework, when the
money supply increases, the result is __________ in Real GDP and __________ in the
price level.
a. no change; no change
b. a rise; no change
c. no change; a rise
d. a rise; a fall
e. a fall; a rise
If world markets change so that the U.S. dollar is no longer the primary reserve
currency, the exchange rate value of the dollar would rise.
a. True
b. False
Exhibit 35-4
Under a fixed exchange rate system, at the exchange rate of E3, the peso is __________
and there is a __________.
a. overvalued; surplus of dollars
b. undervalued; shortage of pesos
c. overvalued; shortage of dollars
d. undervalued; surplus of pesos
Country X experiences an increase in Real GDP and an increase in per-capita Real
GDP. It follows that
a. the residents of country X are happier than they used to be.
b. the benefits of economic growth outweigh the costs of economic growth.
c. the costs of economic growth outweigh the benefits of economic growth.
d. all the residents of country X are “richer” in terms of goods and services than they
used to be.
e. none of the above
Bank B takes 15,000 mortgage loans, bundles them together, and then sells slices of the
bundle.This is descriptive of
a. creating a mortgage-backed security.
b. creating a mortgage-backed liability.
c. buying a collateralized debt obligation.
d. selling a simple loan.
e. none of the above
Globalization first appeared on the world stage two decades ago.
a. True
b. False
Suppose that C = $700, I = $200, G = $200, NX = $100, and that the money supply is
equal to $400.Based upon these assumptions, velocity is equal to ________________.If
consumption and velocity both rise beyond their initial levels, then it follows that
another component of spending ___________ necessarily fall.
a. 3; must
b. 3; does not
c. 4; must
d. 4; does not
Which of the following Fed actions will increase the money supply?
a. open market purchases of Treasury notes
b. an increase in the required reserve ratio
c. an increase in the discount rate
d. all of the above
e. none of the above