D. none of the above--they are always equal

126 If the Japanese government wants to reduce its trade surplus with the United States, which measure would achieve this?
D. None of the above.

127 If net exports are positive, which of the following is false?
D. There is a balance of trade deficit.

128 If net capital outflow is positive, then
C. NX is positive.

129 In the small open economy model of Chapter 5, if a country begins in a position of balanced trade, what happens when the government increases taxes?
D. The balance of trade goes into surplus.

130 In the small open economy model of Chapter 5, starting from balanced trade, an increase in the world interest rate from a fiscal expansion abroad leads to which of the following?
B. Positive net capital outflow and a trade surplus.

131 In a small open economy, the interest rate is determined by the
B. interest rate in the rest of the world.

132. If the IS* curve in the Mundell-Fleming model is expressed by the equation Y = C(Y - T) + I(r*) + G + NX(e) then NX(e) should be interpreted as meaning that
C. imports depend positively on the exchange rate.

133. In a small open economy with a floating exchange rate, a fiscal expansion
C. leaves income unchanged.

134. In a small open economy with a floating exchange rate, a monetary expansion
A. increases income.

135. In an open economy with a fixed exchange rate, a fiscal contraction
D. decreases both the money supply and income.

136 . In an open economy with a fixed exchange rate, expansionary monetary policy
D. is impossible.

137 In a small open economy, which interest rate equals the world interest rate?
A. The real interest rate

138 If a Canadian investor buys one million dollars worth of stock in an American company, how does this transaction appear in the national income accounts of the United States?
D. Net capital outflow falls by $1 million.

139. If the government increases the amount of unemployment insurance that unemployed workers can collect, the amount of frictional unemployment would be expected to
C. rise.

140. In the quantity equation, V represents the
C. the rate at which each unit of money circulates in the economy.

141. If production remains the same and all prices double, then real GDP

C. is constant and nominal GDP doubles.

142. If production remains the same and all prices double relative to the base year, then the GDP deflator is

D. 2.

143. In a closed economy that is in equilibrium, investment is equal to
C. private saving plus public saving.

144. If the real interest rate rises, the quantity of investment demanded
A. will fall.

145. In the Cobb-Douglas production function, Y = K ^a L ^1-a , the fraction of income spent in payments to labor is
B. 1 - a

146. If the money supply is held constant, an increase in the velocity of money would cause the AD curve to
B. shift outward.

147. In a closed economy, the supply of goods and services must be equal to
C. consumption + investment + government purchases.

148. If the government increases government spending, then the aggregate demand curve will
A. shift to the right.

149. If the central bank decreases the supply of money, then the aggregate demand curve will
B. shift to the left.

150. If the government raises taxes and the central bank maintains a policy of keeping the interest rate constant, then the combined effect of these two policies would cause income to
A. fall.

151. If the government raises taxes and the central bank increases the money supply, then the combined effect of these two policies would cause income to
D. it cannot be determined from the information given.

152. If in response to an increase in government spending, the Fed decides to keep interest rates constant, the government purchases multiplier is
A. larger than in the case where the Fed keeps the money supply constant.

153. Many economists favor
A. allows the government to use monetary policy as an output stabilizer.

154. Many economists believe that the rise in European unemployment is caused by
A. generous government benefits..

155. Most economists believe that the Great Depression is unlikely to be repeated in the future. Which of the following is NOT a legitimate reason to believe this?
B. More effort is made today to balance the government budget.

156. Measured unemployment may be lower than actual unemployment because
B. some individuals may want a job but have become discouraged and stopped looking for one.

157. Minimum-wage laws are an example of
B. wage rigidity.

158. Most monetarists believe that
C. money supply fluctuations cause most large fluctuations inthe economy.

159. M2 does not include
B. long-term government bonds.

160. On the same graph as we draw the downward-sloping aggregate demand curve, we draw an aggregate supply curve that is
B. horizontal in the short run and vertical in the long run.

161. Okun's law expresses a relationship between a change in

Date: 2015-12-11; view: 769