Fall 2013: Mercer University
Econ 151: Principles of Macroeconomics
Quiz 4: Answers
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1. If the dollar price of the English pound goes from $1.50 to $1.75, the dollar has
a. appreciated, and Americans will find English goods cheaper.
b. appreciated, and Americans will find English goods more expensive.
c. depreciated, and Americans will find English goods cheaper.
d. depreciated, and Americans will find English goods more expensive.
ANS: D
2. People anticipate inflation will be 3 percent during the next several years. If this is true, when the real interest
rate is 4 percent, the money interest rate will be
a. 1 percent.
b. 3 percent.
c. 4 percent.
d. 7 percent.
ANS: D
3. For an economy, aggregate demand equals
a. consumption plus investment plus government purchases plus exports.
b. consumption plus investment plus government purchases plus (exports minus imports).
c. consumption plus investment plus (taxes minus transfers) plus (exports minus imports).
d. consumption plus investment plus government purchases plus (imports minus exports).
ANS: B
4. If equilibrium is present in the foreign exchange market and a nation is experiencing a trade deficit,
a. the nation must be experiencing a net capital inflow.
b. the nation must be experiencing a net capital outflow.
c. the nation's inflation rate must increase.
d. the nation's interest rate must increase.
ANS: A
5. Other things the same, a decrease in the price level induces people to hold
a. less money, so they lend less, and the interest rate rises.
b. less money, so they lend more, and the interest rate falls.
c. more money, so they lend more, and the interest rate rises.
d. more money, so they lend less, and the interest rate falls.
ANS: B