Macroeconomics

Front 1

At a price level below equilibrium people want to hold

Back 1

less money than the Fed has created, so spending would rise.

Front 2

Under the assumptions of quantity theory, if the money supply increases by 3 percentage points which of the following increases by 3 percentage points?

Back 2

the price level but not real GDP

Front 3

Crystal borrows money at a fixed nominal interest rate expecting inflation to be 2%. However, inflation is 3%. The real interest rate is

Back 3

less than expected so wealth is transferred from the lender to Crystal.

Front 4

Higher inflation makes relative prices

Back 4

vary more than they otherwise would making markets less able to allocate resources to their best use.

Front 5

Nearly all hyperinflations follow the same pattern: high government spending is financed by increases in the money supply. T?F

Back 5

True

Front 6

As inflation rises, people choose to hold less money. The resources used to reduce money holdings are called shoeleather costs.

Back 6

True

Front 7

Suppose the price of the product you sell stays the same, but the prices of other goods and services rise, this means that the

Back 7

Real value of your product fell.

Front 8

As the price level rises, the value of money rises.

Back 8

False

Front 9

purchasing-power parity hold?

Back 9

the nominal exchange rate is 12 pesos per dollar, the price in Mexico is 36 pesos, and the price in the U.S. is $3

Front 10

Improvements in transportation help to explain the increase in both U.S. imports and exports relative to GDP.

Back 10

True

Front 11

A mutual fund in China buys $100,000 of bonds sold by a U.S. corporation. This is an example of

Back 11

-foreign portfolio investment. By itself it reduces U.S. net capital outflow

-Foreign portfolio investment is when a foreigner purchases domestic assets but does not actively manage the business she funds.

Front 12

A country buys $560 billion of goods and services abroad and sells $610 billion of goods and services abroad. Its exports are

Back 12

-610 billion and it has a trade surplus of $50 billion

-A country has a trade surplus when its net exports, which equals exports - imports, are greater than zero.

Front 13

correct way to find the real exchange rate?Formula

Back 13

Front 14

A U.S. retail store uses dollars to purchase yuan (Chinese currency) it then uses all of these yuan to buy toys from a Chinese firm. Overall these transactions have

Back 14

decreased U.S. net exports and decreased U.S. net capital outflow.

Front 15

If a country's real GDP is 10,000, its consumption is 6,500, its government expenditures are 2,000 and its net exports are 500 what are saving and net capital outflow?

Back 15

foreign portfolio investment. By itself it reduces U.S. net capital outflow.

Front 16

Other things the same, if the U.S. dollar appreciates, then U.S. goods become

Back 16

more expensive relative to foreign goods, so U.S. net exports decrease.

Front 17

Purchasing-power parity means that the prices of goods in terms of local currencies must be the same across countries.

Back 17

False

Front 18

If the U.S. inflation rate is positive and higher than the inflation rate in Australia over the next few years then

Back 18

the U.S. dollar will buy fewer goods in the U.S. and buy fewer Australian dollars in the market for foreign currency exchange.