Which of the following statements is correct?

a	The level of real GDP is a good gauge of economic prosperity, and the growth of real GDP is a good gauge of economic progress.
b	The level of real GDP is a good gauge of economic progress, and the growth of real GDP is a good gauge of economic prosperity.
c	The level of real GDP is a good gauge of economic prosperity, and the level of real GDP per person is a good gauge of economic progress.
d	The level of real GDP is a good gauge of economic progress, and the level of real GDP per person is a good gauge of economic prosperity.

Question 2 (1 point)

If the United States imposes an import quota on clothing then U.S exports

a	increases U.S imports increase and U.S net exports will not change.
b	increases U.S imports decrease and U.S net exports increases.
c	decreases U.S imports increase and U.S net exports decreases.
d	decrease U.S imports decrease and U.S net exports will not change.

Question 3 (1 point)

A country has national savings of $70 billion, government expenditures of $20 billion, domestic investment of $30 billion and net capital outflow of $40 billion what is its supply of loanable funds?

a	$30 billion
b	$40 billion
c	$50 billion
d	$70 billion

Question 4 (1 point)

Mike, a U.S citizen buys 1,000 worth of olives from Greece. By itself this purchase

a	Increases U.S imports by $1000 and increases U.S net exports by $1000.
b	Increases the U.S imports by $1000 and decreases U.S net exports by$1000.
c	Increases U.S exports by $1000 increases U.S net exports by $1000.
d	Increases U.S exports by $1000 and decreases U.S net exports.

Question 5 (1 point)

In the U.S each additional year of schooling has historically raised a person's wage on average by about __________

a	5 percent. In less developed countries the gap between the wages of education and uneducated workers is smaller.
b	10 percent. In less developed countries the gas between the wages of educated and uneducated workers is smaller .
c	5 percent in. In less developed countries the gap between the wages of educated and uneducated workers is larger.
d	10 percent. In less developed countries the gap between the wages of educated and uneducated workers is larger.

Question 6 (1 point)

From 2001 to 2004 the U.S government went from a budget surplus to a budget deficit. According to the open-economy macroeconomic model this should have decreased

a	both the supply of funds and the supply of dollars in the market for foreign-currency exchange.
b	neither the supply of loanable funds not the supply of dollars in the market for foreign-currency exchange.
c	the supply of loanable funds but not the supply of dollars in the market for foreign-currency exchange.
d	the supply of dollars in the market for foreign-currency exchange but not the supply of loanable funds.

Question 7 (1 point)

Electronics firms may be able to get patents on their ideas. Doing so makes their ideas __________

a	Private goods rather than public goods. This gives people more incentive to engage in research,
b	Private goods rather than public goods. This gives people less incentive to engage in research,
c	Public goods rather than private goods. This gives people more incentive to engage in research,
d	Public goods rather than private goods. This gives people more incentive to engage in private research.

Question 8 (1 point)

The nominal exchange rate is .80 euros per U.S dollar and a basket of goods in France costs 1000 euros while the same basket the costs $800 in the U.S. Tthe nominal exchange rate is 1.2 Australian dollars per U.S dollar and a basket of goods in Australian costs 960 Australian dollars while the same basket costs $800 in the U.S
Which country has purchasing-power parity with the U.S?

a	France
b	Australia
c	Neither France nor Australia.
d	none of the above.

Question 9 (1 point)

Suppose that a new government is elected in Lawrencia. The new government takes steps toward improving the court system and reducing government corruption. The citizens of Lawencia find these efforts credible and outsiders believe these changes will be effective and long lasting. These changes will probably __________

a	Raise real GDP per person and productivity in Lawrencia.
b	Raise real GDP per person but not productivity in Lawrencia.
c	Raise productivity but not real GDP per person in Lawrencia.
d	Raise neither productivity not real GDP per person in Lawrencia.

Question 10 (1 point)

Which of the following are effects of an increased budget deficit?

a	The supply loanable funds does not change; a higher interest rate reduces private savings .
b	The supply of loanable funds does not change; a higher interest rate raises private savings.
c	At any interest rate the supply of loanable funds is less; a higher interest rate reduces private savings.
d	At any interest rate the supply of loanable funds is less; a higher interest rate raises private savings.

Question 11 (1 point)

During the last tax year you lent money at a nominal rate of 6 percent. Actual inflation was 1 percent, but people had been expecting 1.5 percent. This different between actual and expected inflation

a	transferred wealth from the borrower to you and caused your after tax real interest rate to be 0.5 percentage points higher than what you had expected .
b	transferred wealth from the borrower to you and caused your after tax real interest rate to be more than 0.5 percentage points higher than what you had expected .
c	transferred wealth from the borrower to you and caused your after tax real interest rate to be 0.5 percentage points lower than what you had expected.
d	transferred wealth from the borrower to you and caused your after tax real interest rate to be more than 0.5 percentage points lower than what you had expected.

Question 12 (1 point)

If net exports are negative then

a	net capital outflow is positive so foreign assets brought by Americans are greater than American assets brought by foreigners.
b	net capital outflow is positive so American assets bought by foreign ers are greather than foreign assets bought by American.
c	net capital outflow is negative so foreign assets bought by Americans are greater than American assets bought by foreigner.
d	net capital outflows is negative so Americans assets bought by foreigner are greater than foreign assets bought by Americans.

Question 13 (1 point)

When a country's central bank increases the money supply, a unit of money

a	Gains value both terms of the domestic goods and services it can buy but looses value in terms of the foreign currency in can buy.
b	Gains value in terms of the domestic goods and services it can buy but loses value in terms of the foreign currency it can buy.
c	Loses value in terms of the domestic goods and services it can buy but gains value in terms of the foreign currency it can buy.
d	Loses value in terms of the domestic goods and services it can buy but loses value in terms of the foreign currency it can buy.

Question 14 (1 point)

Suppose the U.S offered a tax credit for firms that built new factories in the U.S. Then __________

a	The demand for loanable funds would shift rightward, initially creating a surplus of loanable funds at the original interest rate.
b	The demand for loanable funds would shift right, initially creating a shortage of loanable funds at the original interest rate.
c	The supply of loanable funds would shift right ward, initially creating a surplus of loanable funds at the original interest rate.
d	The supply of loanable funds would shift rightward, initially creating a shortage of loanable funds at the original interest rate.

Question 15 (1 point)

A problem that the Fed faces when it attempts to control the money supply is that

a	100-percent -reserves banking systems in the U.S makes it difficult for the Fed to carry out its monetary policy.
b	the Fed has to get the approval of the U.S Treasury Department whenever it uses any of its monetary policy tools.
c	the Fed does not have a tool that it can use to change the money supply by either a small amount or a large amount.
d	the Fed does not control the amount of money that households choose to hold as deposits in banks.

Question 16 (1 point)

The Federal Reserve

a	is a central bank: it is responsible for conducting the nation's monetary policy: and it plays a role in regulating banks.
b	is a central bank: it is responsible for conducting the nation's monetary policy: but it plays no role in regulating banks.
c	is not a central bank: it is responsible of conducting the nation's monetary policy: and it plays a role in regulating banks .
d	is a central bank: it plays a role in regulating banks: but it is not responsible for conducting the nations monetary policy.

Question 17 (1 point)

Which of the following statements are correct?

a	A general, persistent decline in stock prices may signal that the economy is about to enter a boom period because people will be able to buy stock for less money.
b	A general, persistent decline in stock prices may signal that the economy is about to enter a recession because low stock prices may mean that people are expecting low corporate profits.
c	A general, persistent decline in stock prices may signal that the economy is about to enter a recession because low stock prices mean that corporations have had low profits in the past.
d	Expectations about the business cycle have no impact on stock prices.

Question 18 (1 point)

Other things the same, a country that increases its savings rate increases __________

a	Its future productivity and future real GDP.
b	Neither its future productivity nor future real GDP.
c	Its future productivity but not its future real GDP.
d	Its future real GDP but not its future productivity.

Question 19 (1 point)

In 2002 the United States placed higher tariffs on imports of steel. According to the open economy macroeconomic model this policy should have

a	reduced imports into the U.S and made U.S exports rise.
b	reduced imports into the U.S and made the net supply of dollars in the foreign exchange market shift right.
c	reduced imports of steel into the U.S but reduced U.S exports of other goods by an equal amount.
d	reduced imports of steel into U.S and increased U.S exports of other goods by an equal amount.

Question 20 (1 point)

A sale of government bonds by the Fed

a	increases the money supply and increases the federal funds rate.
b	increases the money supply and decreases the federal funds rate.
c	decreases the money supply and increases the federal funds rate.
d	decreases the money supply and decreases the federal funds rate.

Answer rating: 100% (QA)

1 The level of real GDP is a good gauge of economic prosperity and the level of real GDP per person is a good gauge of economic progress Real GDP reflects the economys entire size and capacity to crea... View the full answer