a. the unemployment rate decreases.
b. prices fall.
c. prices increase, but at a slower rate.
d. real GDP decreases.
#2. In 2015, U.S. nominal GDP was approximately
a. $18 billion.
b. $18 trillion.
c. $18 million.
d. $180 trillion.
#3. An increase in the price of goods bought by firms and the government will show up in:
a. the GDP deflator but not in the CPI.
b. the CPI but not in the GDP deflator.
c. neither the CPI nor the GDP deflator.
d. both the CPI and the GDP deflator.
#4. In the classical model with fixed income, if households want to save more than firms want to
invest, then:
a. output increases.
b. output falls.
c. the interest rate rises.
d. the interest rate falls.
#5. The government raises lump-sum taxes on income by $100 billion, and the neoclassical economy
adjusts so that output does not change. If the marginal propensity to consume is 0.6, private saving:
a. rises by $40 billion.
b. falls by $40 billion.
c. falls by $60 billion.
d. rises by $60 billion.
, Aadland – Spring 2016
#6. If the currency-deposit ratio equals 0.5 and the reserve-deposit ratio equals 0.1, then the money
multiplier equals:
a. 2.0.
b. 2.5.
c. 0.6.
d. 1.67.
#7. Bank reserves equal:
a. gold kept in bank vaults.
b. gold kept at the central bank.
c. currency plus demand deposits.
d. deposits that banks have received but have not lent out.
#8. If domestic saving is less than domestic investment, then net exports are and net capital
outflows are .
a. positive; positive.
b. positive; negative.
c. negative; positive.
d. negative; negative.
#9. Unemployment caused by the time it takes workers to search for a job is called
unemployment.
a. frictional
b. structural
c. insider
d. efficiency
#10. The value of net exports is also the value of:
a. net investment.
b. net saving.
c. national saving.
d. the excess of national saving over domestic investment.
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