1.
In 1998, the Russian government defaulted on its bonds. According to the open-economy
macroeconomic model, this should have
a. increased Russian interest rates and net exports.
b. reduced Russian interest rates and net exports.
c. increased Russian interest rates and reduced Russian net exports.
d. reduced Russian interest rates and increased Russian net exports.
2.
Economic expansions in Europe and China would cause the U.S. price level
a. and real GDP to rise.
b. and real GDP to fall.
c. to rise and real GDP to fall.
d. to fall and real GDP to rise.
3.
The effect of an increase in the price level on the aggregate-demand curve is represented by a
a. shift to the right of the aggregate-demand curve.
b. shift to the left of the aggregate-demand curve.
c. movement to the left along a given aggregate-demand curve.
d. movement to the right along a given aggregate-demand curve.
4.
An increase in household saving causes consumption to
a. rise and aggregate demand to increase.
b. rise and aggregate demand to decrease.
c. fall and aggregate demand to increase.
d. fall and aggregate demand to decrease.
-----------------------------------------------------------------------------------------------------------------------------------------------------------5. Evidence from research studies by economists
a. shows that increased unemployment benefits decrease the job search efforts of the
unemployed.
b. shows that increased unemployment benefits have virtually no effect on the job search efforts
of the unemployed.
c. shows that increased unemployment benefits increase the job search efforts of the
unemployed.
d. is unclear regarding what increased unemployment benefits do to the job search efforts of the
unemployed.
6.
Suppose the banking system currently has $300 billion in reserves, the reserve requirement is 5
percent, and excess reserves are $30 billion. What is the level of loans?
a. $270 billion
b. $5,400 billion
c. $6,000 billion
d. $5,100 billion
7.
Katerina puts money into an account. One year later she sees that she has 6 percent more dollars and
that her money will buy 4 percent more goods. The nominal interest rate was
a. 10 percent and the inflation rate was 6 percent.
b. 6 percent and the inflation rate was 2 percent.
c. 4 percent and the inflation rate was 2 percent.
d. 10 percent and the inflation rate was 4 percent.
8.
Wealth is redistributed from creditors to debtors when inflation is
a. high, whether it is expected or not.
b. low, whether it is expected or not.
c. unexpectedly high.
d. unexpectedly low.
9.
The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises
more than expected, production is
a. more profitable and employment and output rises.
b. more profitable and employment and output falls.
c. less profitable and employment and output rises.
d. less profitable and employment and output falls.
10.
If a country has a positive net capital outflow, then
a. on net it is purchasing assets from abroad. This adds to its demand for domestically generated
loanable funds.
b. on net it is purchasing assets from abroad. This subtracts from its demand for domestically
generated loanable funds.
c. on net other countries are purchasing assets from it. This adds to its demand for domestically
generated loanable funds.
d. on net other countries are purchasing assets from it. This subtracts from its demand for
domestically generated loanable funds.
11.
Which of the following would not be directly included in aggregate demand?
a. An increase in firms' inventories
b. Purchases of goods by households
c. Firms' purchases of newly produced machinery
d. Government's tax collections