11) After a small hurricane in Florida, unemployment is low as there is a great deal of construction
work and businesses run at full capacity. This suggests that
A) the economy is operating above the full employment level and will eventually adjust back
to long run aggregate supply.
B) living standards are falling as employment and economic activity are too high.
C) the economy is operating below its long run level and living standards are less than they
would have been without the hurricane.
D) the hurricane is beneficial since it is increasing employment and replacing less efficient
capital with newer and more efficient capital.
12) A stronger U.S. dollar in world exchange markets means that
A) a dollar buys more units of foreign currency than it could before.
B) a dollar buys less units of foreign currency than it could before.
C) a dollar buys the same amount of foreign currency than it could before, with gold backing
up the value of the dollar.
D) foreigners sell the dollars that they have.
13) A stronger dollar leads to cheaper input prices for U.S. firms because
A) U.S. workers are willing to work for less pay because of the stronger dollar.
B) U.S. producers of intermediate goods lower prices in order to benefit from the stronger
dollar.
C) imports of raw materials and intermediate goods are cheaper.
D) exports of raw materials and intermediate goods are cheaper.
14) One effect of a stronger dollar is
A) an increase in U.S. exports and a reduction in U.S. imports.
B) a reduction in U.S. exports and an increase in U.S. imports.
C) an increase in net exports.
D) an increase in both imports and exports. The effect on net exports is uncertain.