$119$

answer:

source:

objective:

Suppose that the size of the budget deficit increases. How does this affect the supply of

loanable funds, net capital outflow, and the supply of dollars in the foreign exchange

market?

a$.$ The supply of loanable funds increases, but net capital outflow and the supply

of dollars are not affected.

b$.$ The supply of loanable funds increases, net capital outflow falls, and the supply

of dollars rises.

c$.$ The supply of loanable funds decreases, net capital outflow rises, and the

supply of dollars falls.

d$.$ The supply of loanable funds decreases, and both net capital outflow and the

supply of dollars fall.

$120$

answer:

source:

objective:

Which statement best describes the demand for loanable funds?

a$.$ It is determined by interest rates and the quantity of loanable

funds demanded.

b$.$ It equals the quantity of loanable funds demanded at the current

interest rate.

c$.$ It is the sum of business, household, government, and

foreign debt.

d$.$ It is determined by domestic plus net foreign

investment.

$121$

answer:

source:

objective:

Which of the following best describes an import quota?

a$.$ a duty on an imported

good

b$.$ a tariff set so high that it prevents the sale of the product in

the country

c$.$ a voluntary agreement by another country to

limit exports

d$.$ a restriction setting a maximum limit on the amount of an import that may be

brought into the country

$122$

answer:

source:

objective:

Which statement best describes capital flight?

a$.$ It refers to a large and sudden increase in the demand for assets

in the country.

b$.$ It refers to a large and sudden flight of capital into

the country.

c$.$ It causes an increase in interest rates in the country that

experiences capital flight.

d$.$ It causes an increase in the amount of currency in the country that

experiences capital flight.

$123$

answer:

source:

objective:

Which statement best describes how a tariff differs from a quota?

a$.$ A tariff is levied on imports, whereas a quota is imposed

on exports.

b$.$ A tariff is levied on exports, whereas a quota is imposed

on imports.

c$.$ A tariff is a tax levied by a foreign country, whereas a quota is a limit on the

total trade allowed.

d$.$ A tariff is a tax imposed on imports, whereas a quota is an absolute limit to the

number of units of a good that can be imported.

$124$

answer:

source:

objective:

What is a likely reason for the decrease in real GDP during a recession?

a$.$ a decrease in investment

spending

b$.$ a decrease in government

spending

c$.$ a decrease in net

exports

d$.$ a decrease in net

imports

$125$

answer:

source:

objective:

Which term best describes an increase in the spending of households and businesses

resulting from the increased purchasing power of a

a$.$ wealth

effect

b$.$ inflationary

tradeoff

c$.$ nominal$-$income

effect

d$.$

multiplier

$126$

answer:

source:

objective:

One reason the aggregate$-$demand is downward sloping is that

a$.$ an increase in price level makes consumers wealthier and decreases

their consumption.

b$.$ an increase in price level increases the interest rate and

decreases investment.

c$.$ an increase in price level depreciates the real exchange rate and

decreases net exports.

d$.$ an increase in price level depreciates the real exchange rate and

increases net exports.

$127$

answer:

source:

objective:

Which of the following will lead to a decrease in aggregate demand in Canada?

a$.$ a higher price

level

b$.$ a decrease in the real

interest rate

c$.$ rapid growth in real income in Japan and

Western Europe

d$.$ a depreciation in the exchange rate value of

the dollar

$128$

answer:

source:

objective:

Which of the following occurs during a recession?

a$.$ an increase in unemployment and a decrease in real output

and real income

b$.$ an increase in unemployment and an increase in real output

and real income

c$.$ a decrease in unemployment and an increase in real output

and real income

d$.$ a decrease in unemployment and a decrease in real output

and real income

$129$

answer:

source:

objective:

Which curve is shifted by an improvement in the quality of education in Canada

increasing the productivity of labour?

a$.$ only the aggregate

demand

b$.$ both the aggregate demand and the

aggregate supply

c$.$ only the short$-$run aggregate

supply

d$.$ both the short$-$run and the long$-$run

aggregate supply

$130$

answer:

source:

objective:

Starting with initial long$-$run equilibrium, which effect, in the short run, will likely occur

from a sudden decrease in optimism about future business conditions?

a$.$ an increase in output and a reduction in the

price level

b$.$ an increase in both output and the

price level

c$.$ a reduction in both output and the

price level

d$.$ a reduction in output and an increase in the

price level