Post Eco201 final exam

• Question 1

2 out of 2 points

Other things the same, an increase in the money supply cause the interest rate to rise to balance money supply and money demand.

Answers: True

False

• Question 2

2 out of 2 points

According to Friedman and Phelps it is appropriate to view the Phillips curve as a menu of options available to policymakers.

Answers: True

False

• Question 3

0 out of 2 points

Purchasing-power parity means that the prices of goods in terms of local currencies must be the same across countries.

Answers: True

False

• Question 4

2 out of 2 points

During recessions

Answers: unemployment falls and a decline in consumption accounts for the majority of the decline in output.

unemployment rises and a decline in consumption accounts for the majority of the decline in output.

unemployment rises and a decline in investment accounts for the majority of the decline in output.

unemployment falls and a decline in investment accounts for the majority of the decline in output.

• Question 5

0 out of 2 points

Which of the following decreases the natural rate of unemployment?

Answers:

a decrease in the minimum wage but not an increase in the money supply growth rate

neither an increase in the money supply growth rate nor a decrease in the minimum wage

a decrease in the minimum wage and an increase in the money supply growth rate

an increase in the money supply growth rate but not a decrease in the minimum wage

• Question 6

2 out of 2 points

As the price level rises, the value of money rises.

Answers: True

False

• Question 7

2 out of 2 points

If the U.S. inflation rate is positive and higher than the inflation rate in Australia over the next few years then

Answers:

the U.S. dollar will buy fewer goods in the U.S. and buy fewer Australian dollars in the market for foreign currency exchange.

the U.S. dollar will buy fewer goods in the U.S. but buy more Australian dollars in the market for foreign currency exchange.

the U.S. dollar will buy more goods in the U.S. and buy more Australian dollars in the market for foreign currency exchange.

the U.S. dollar will buy more goods in the U.S. but buy fewer Australian dollars in the market for foreign currency exchange.

• Question 8

2 out of 2 points

If Americans decided to save a larger fraction of their income, the interest rate would fall and the dollar would depreciate.

Answers: True

False

• Question 9

2 out of 2 points

As inflation rises, people choose to hold less money. The resources used to reduce money holdings are called shoe leather costs.

Answers: True

False

• Question 10

2 out of 2 points

If firms and businesses became more optimistic about the future, what would happen to prices and output in the short run?

Answers: prices would fall and output would rise

prices and output would rise

prices would rise and output would fall

prices and output would fall

• Question 11

2 out of 2 points

The demand curve for dollars in the market for foreign-currency exchange is based on the logic that a decrease in the exchange rate makes

Answers: domestic goods more expensive relative to foreign goods so net exports rise.

purchasing assets from abroad less attractive so net capital outflow rises.

purchasing assets from abroad more attractive so net capital outflow rises.

domestic goods less expensive relative to foreign goods so net exports rise.

• Question 12

0 out of 2 points

Under the assumptions of quantity theory, if the money supply increases by 3 percentage points which of the following increases by 3 percentage points?

Answers:

the price level but not real GDP

neither real GDP nor the price level

real GDP but not the price level

real GDP and the price level

• Question 13

0 out of 2 points

Suppose the price of the product you sell stays the same, but the prices of other goods and services rise, this means that the

Answers: nominal value of your product rose.

nominal value of your product fell.

real value of your product fell.

real value of your product rose.

• Question 14

0 out of 2 points

In the United States during the 1970’s, expected inflation rose substantially. This rise was due entirely to a supply shock not to higher money supply growth.

Answers: True

False

• Question 15

0 out of 2 points

Other things the same, if the U.S. dollar appreciates, then U.S. goods become

Answers: cheaper relative to foreign goods, so U.S. net exports decrease.

more expensive relative to foreign goods, so U.S. net exports increase.

more expensive relative to foreign goods, so U.S. net exports decrease.

cheaper relative to foreign goods, so U.S. net exports increase.

• Question 16

0 out of 2 points

The long-run Phillips curve implies that monetary policy influences nominal but not real variables.

Answers: True

False

• Question 17

2 out of 2 points

According to the economist’s definition, money includes only the few types of wealth that are regularly accepted by sellers in exchange for goods and services.

Answers: True

False

• Question 18

0 out of 2 points

According to the long-run Phillips curve what are the long-run effects of an increase in the money supply growth rate?

Answers: higher inflation and higher unemployment.

no change in inflation or unemployment.

higher inflation and no change in unemployment.

higher inflation and lower unemployment

• Question 19

0 out of 2 points

If the U.S. were to impose an import quota on CD players

Answers: net exports and the exchange rate would rise.

net exports and the exchange rate would be unchanged.

net exports would be unchanged and the exchange rate would rise.

net exports would rise and the exchange rate would be unchanged.

• Question 20

2 out of 2 points

When the Fed announces a target for the federal funds rate it essentially accommodates the day-to-day shifts in money demand by adjusting the money supply accordingly.

Answers: True

False

• Question 21

0 out of 2 points

The recession of 2008-2009 was associated with a decrease in aggregate demand.

Answers: True

False

• Question 22

2 out of 2 points

National saving is the source of the supply of loanable funds in the open-economy macroeconomic model.

Answers: True

False

• Question 23

2 out of 2 points

The Fed’s primary tool to change the money supply is open-market operations, the buying and selling of bonds.

Answers: True

False

• Question 24

0 out of 2 points

If some firms have sticky prices, and the price level raises more than had been anticipated, then in the short run those firms with sticky prices will have

Answers:

an increase in customers and so increase production.

a decrease in customers and so reduce production.

a decrease in customers but will not change production.

an increase in customers but will not change production.

• Question 25

0 out of 2 points

Classical theory points to money supply growth as the primary determinant of

Answers: both unemployment and inflation.

neither inflation nor unemployment.

unemployment but not inflation.

inflation but not unemployment.

• Question 26

0 out of 2 points

Money that has value as a good is called fiat money.

Answers: True

False

• Question 27

0 out of 2 points

If the U.S. put an import quota on refrigerators, it would

Answers: raise U.S. net exports of refrigerators and raise net exports of other U.S. goods.

lower U.S. net exports of refrigerators and lower net exports of other U.S. goods.

lower U.S. net exports of refrigerators and raise net exports of other U.S. goods.

raise U.S. net exports of refrigerators and lower net exports of other U.S. goods.

• Question 28

0 out of 2 points

Which of the following best illustrates money’s use as a unit of account?

Answers: Susan deposits money in her checking account so she can make purchases in the future.

Loan repayments are given in terms of dollars.

Ann liquidates stocks.

Robert uses dollars to buy tickets for a concert.

• Question 29

2 out of 2 points

A mutual fund in China buys $100,000 of bonds sold by a U.S. corporation. This is an example of

Answers:

foreign portfolio investment. By itself it reduces U.S. net capital outflow.

foreign direct investment. By itself it raises U.S. net capital outflow.

foreign portfolio investment. By itself it raises U.S. net capital outflow.

foreign direct investment. By itself it reduces U.S. net capital outflow.

• Question 30

0 out of 2 points

If aggregate demand shifts right farther than expected, then

Answers: inflation is lower than expected and unemployment rises.

inflation is higher than expected and unemployment falls.

inflation is lower than expected and unemployment falls.

inflation is higher than expected and unemployment rises.

• Question 31

0 out of 2 points

Which of the following is included in M2 but not M1?

Answers: other checkable deposits

demand deposits

traveler’s checks

savings deposits

• Question 32

2 out of 2 points

An increase in the interest rate increases the opportunity cost of holding money, so the quantity of money demanded falls.

Answers: True

False

• Question 33

0 out of 2 points

Which of the following Fed actions both increase the money supply?

Answers: increasing reserve requirements, decreasing the interest rate it pays on reserves

increasing reserve requirements, increasing the interest rate it pays on reserves

decreasing reserve requirements, decreasing the interest rate it pays on reserves

decreasing reserve requirements, increasing the interest rate it pays on reserves

• Question 34

0 out of 2 points

If the government of a foreign country chooses to purchase large quantities of U.S. assets, which of the following happens?

Answers: the U.S. interest rate rises and the dollar appreciates

the U.S. interest rate falls and the dollar depreciates

the U.S. interest rate falls and the dollar appreciates

the U.S. interest rate rises and the dollar depreciates

• Question 35

2 out of 2 points

According to rational expectations if the government made a credible commitment to a policy of low inflation, people would be rational enough to lower their expectations of inflation immediately. The short run Phillips curve would shift downward and the economy would reach low inflation quickly.

Answers: True

False

• Question 36

2 out of 2 points

Net capital outflow equals net exports.

Answers: True

False

• Question 37

0 out of 2 points

If consumers and businesses became more pessimistic about the future of the economy, the government could try to stabilize output by

Answers: decreasing government expenditures. The primary objection to this is that an increase in government expenditures has no impact on the economy.

decreasing government expenditures. The primary objection to this is that there are lags in implementing fiscal policy.

increasing government expenditures. The primary objection to this is that an increase in government expenditures has no impact on the economy.

increasing government expenditures. The primary objection to this is that there are lags in implementing fiscal policy.

• Question 38

0 out of 2 points

During the financial crisis and recession of 2008-2009

Answers: unemployment and inflation were low

unemployment and inflation were high

unemployment was low and inflation was high

unemployment was high and inflation was low

• Question 39

0 out of 2 points

Net capital outflow is determined by

Answers: the interest rate and the exchange rate. It is the source of the supply of dollars in the market for foreign-currency exchange.

the interest rate and the exchange rate. It is the source of the demand for dollars in the market for foreign-currency exchange.

the interest rate but not the exchange rate. It is the source of the supply of dollars in the market for foreign-currency exchange.

the interest rate but not the exchange rate. It is the source of the demand for dollars in the market for foreign-currency exchange.

• Question 40

0 out of 2 points

A U.S. retail store uses dollars to purchase Yuan (Chinese currency) it then uses all of these Yuan to buy toys from a Chinese firm. Overall these transactions have

Answers: increased U.S. net exports and decreased U.S. net capital outflow.

decreased U.S. net exports and increased U.S. net capital outflow.

increased U.S. net exports and increased U.S. net capital outflow.

decreased U.S. net exports and decreased U.S. net capital outflow.

• Question 41

2 out of 2 points

An open economy can only finance its investment purchases with domestic saving.

Answers: True

False

• Question 42

2 out of 2 points

At a price level below equilibrium people want to hold

Answers:

less money than the Fed has created, so spending would rise.

less money than the Fed has created, so spending would fall.

more money than the Fed has created, so spending would fall.

more money than the Fed has created, so spending would rise.

• Question 43

2 out of 2 points

Which of the following both decrease the money supply?

Answers:

banks want to hold a larger share of deposits as excess reserves, households want to hold more currency relative to deposits

banks want to hold a smaller share of deposits as excess reserves, households want to hold less currency relative to deposits

banks want to hold a smaller share of deposits as excess reserves, households want to hold more currency relative to deposits

banks want to hold a larger share of deposits as excess reserves, households want to hold less currency relative to deposits

• Question 44

0 out of 2 points

Other things the same, an increase in the price level shifts money demand

Answers: left which raises the interest rate.

left which lowers the interest rate.

right which raises the interest rate.

right which lowers the interest rate.

• Question 45

2 out of 2 points

If the short-run aggregate supply curve were to shift left, prices and output would fall.

Answers: True

False

• Question 46

2 out of 2 points

Short-run fluctuations in output and the price level should be viewed as deviations from the continuing long-run trends of output growth and inflation.

Answers: True

False

• Question 47

0 out of 2 points

In the market for foreign currency-exchange an increase in the demand for dollars would cause the real exchange rate to fall.

Answers: True

False

• Question 48

2 out of 2 points

Nearly all hyperinflations follow the same pattern: high government spending is financed by increases in the money supply.

Answers: True

False

• Question 49

2 out of 2 points

How many members of the Board of Governors are voting member of the FOMC?

Answers:

seven

twelve

four

five

• Question 50

0 out of 2 points

In 2008 the U.S. budget deficit increased. According to the open-economy macroeconomic model

Answers:

the interest rate and the real exchange rate should have risen.

the interest rate and the real exchange rate should have fallen.

the interest rate should have fallen and the real exchange rate should have risen.

the interest rate should have risen and the real exchange rate should have fallen.Click here to have a similar paper done for you by one of our writers within the set deadline at a discounted…