Based on the Saving-Investment Diagram, the difference between values H and E could measure the net capital inflow, if ________. A) the difference between values H and D measures the trade surplus B) the domestic real interest rate is indicated by A C) desired saving has increased D) desired investment has decreased E) none of […]
Government-backed deposit insurance ________. A) protects “good” banks from the misdeeds of “bad” banks B) is intended to encourage banks to pursue high-risk activities C) is an example of prudential regulation D) is an example of government-directed credit ANSWER A
In an open economy, the law of one price implies that A) the domestic economy may have a comparative advantage in only half the goods it produces. B) perfect competition holds in all domestic markets. C) purchasing power parity should hold. D) the nominal exchange rate should equal one. ANSWER C
In the endogenous growth model presented in the text, an increase in the efficiency of human capital accumulation A) increases the growth rate of human capital and increases the growth rate of output. B) increases the growth rate of human capital and decreases the growth rate of output. C) decreases the growth rate of human […]
The property that macroeconomic variables fluctuate together in patterns that exhibit strong regularities is called A) coincidence. B) co-movement. C) correlation. D) coexistence. ANSWER B
The nominal exchange rate is the A) domestic currency price of foreign currency. B) foreign currency price of domestic currency. C) price of domestic goods in terms of foreign goods. D) price of foreign goods in terms of domestic goods. ANSWER A
Consider the two graphs above. Suppose rising fuel costs makes it more expensive to move goods to and from warehouses. This would ________ the desired level of inventories, as depicted in graph ________. A) increase; B B) increase; A C) decrease; B D) decrease; A ANSWER C
Before 2000, the three most recent U.S. recessions occurred in A) 1969-1973, 1979-1982, and 1994-1995. B) 1973-1975, 1982-1985, and 1990-1991. C) 1973-1975, 1981-1982, and 1990-1991. D) 1981-1982, 1990-1991, and 1998-1999. ANSWER C
Expectations are adaptive in ________. A) traditional Keynesian models B) the Lucas Model C) new Keynesian theory D) the real business cycle model ANSWER A
Consider the two graphs above. Suppose that final goods are assembled only when ordered and to satisfy the precise preferences of each consumer. This would ________ the desired level of inventories, as depicted in graph ________. A) increase; B B) increase; A C) decrease; B D) decrease; A ANSWER B
