ExamView_Pro_-_Test_2_Practice_Spring_2008
15 Pages

ExamView_Pro_-_Test_2_Practice_Spring_2008

Course Number: ECON 012, Spring 2008

College/University: GWU

Word Count: 4975

Rating:

Document Preview

Name: ________________________ Class: ___________________ Date: __________ ID: A Test 2 Practice Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. In 2004, based on concepts similar to those used to estimate U.S. employment figures, the Italian adult non-institutionalized population was 45.020 million, the labor force was 24.065 million, and the...

Unformatted Document Excerpt
Coursehero >> District of Columbia >> GWU >> ECON 012

Course Hero has millions of student submitted documents similar to the one
below including study guides, practice problems, reference materials, practice exams, textbook help and tutor support.

Course Hero has millions of student submitted documents similar to the one below including study guides, practice problems, reference materials, practice exams, textbook help and tutor support.

________________________ Name: Class: ___________________ Date: __________ ID: A Test 2 Practice Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. In 2004, based on concepts similar to those used to estimate U.S. employment figures, the Italian adult non-institutionalized population was 45.020 million, the labor force was 24.065 million, and the number of people employed was 22.105 million. According to these numbers, the Italian labor-force participation rate and unemployment rate were about a. 45.1%, 8.1% b. 45.1%, 4.4% c. 53.5%, 8.1% d. 53.5%, 4.4% 2. Suppose some country had an adult population of about 50 million, the labor-force participation rate was 60 percent, and the unemployment rate was 5 percent. What were the number of people employed and the number of people in the labor force? a. 27.5 million, 30 million b. 28.5 million, 30 million c. 30 million, 31.5 million d. 30 million, 32.5 million 3. Among teenagers, which group has the highest unemployment rate? a. white males b. black females c. black males d. There are no significant differences in unemployment rates across these groups. 4. Recent entrants into the labor force account for about a. 1/5 of those who are unemployed. b. 1/4 of those who are unemployed. c. 1/3 of those who are unemployed. d. 1/2 of those who are unemployed. 5. Which of the following is correct? a. Short-term unemployment is a more serious problem than long-term unemployment. b. Most spells of unemployment are long term. c. Most of the currently unemployed have been unemployed a long time. d. None of the above is correct. 6. Job search a. explains why firms pay less than the competitive equilibrium wage. b. is due simply to the failure of wages to balance labor supply and labor demand. c. is the process of matching workers with appropriate jobs. d. All of the above are correct. 7. Wages in excess of their equilibrium level help explain a. frictional but not structural unemployment. b. structural but not frictional unemployment. c. frictional and structural unemployment. d. neither frictional or structural unemployment. ____ ____ ____ ____ ____ ____ 8 Name: ________________________ ____ ID: A ____ ____ ____ ____ ____ ____ ____ ____ 8. Suppose that butchers and bakers had no unions. Now suppose the butchers form a union. What does this do the labor supply of and wages of bakers? a. it increases the labor supply and wages of bakers. b. it increases the labor supply and decreases the wages of bakers. c. it decreases the labor supply and increases the wages of bakers. d. it decreases the labor supply and wages of bakers. 9. Efficiency wages a. increase frictional unemployment by keeping wages above equilibrium. b. decrease frictional unemployment by keeping wages at equilibrium. c. increase structural unemployment by keeping wages above equilibrium. d. decrease structural unemployment by keeping wages at equilibrium. 10. You get money for babysitting the neighbors' children. This best illustrates which function of money? a. medium of exchange b. unit of account c. store of value d. liquidity 11. Current U.S. currency is a. fiat money with intrinsic value. b. fiat money with no intrinsic value. c. commodity money with intrinsic value. d. commodity money with no intrinsic value. 12. Fiat money a. has no intrinsic value. b. is backed by gold. c. has intrinsic value equal to its value in exchange. d. is any close substitute for currency such as checkable deposits. 13. The legal tender requirement means that a. people are more likely to accept the dollar as a medium of exchange. b. the government must hold enough gold to redeem all currency. c. people may not make trades with anything else. d. All of the above are correct. 14. Demand deposits are included in a. M1 but not M2. b. M2 but not M1. c. M1 and M2. d. neither M1 nor M2. 15. Savings deposits are included in a. M1 but not M2. b. M2 but not M1. c. M1 and M2. d. neither M1 nor M2. 16. The Board of Governors a. is currently chaired by Paul Volcker. b. are appointed by the president and confirmed by the Senate. c. has twelve members. d. All of the above are correct. 2 Name: ________________________ ID: A ____ 17. Which of the following has a four-year term? a. the members of the Board of Governors b. the Chair of the Board of Governors c. the members of the FOMC d. All of the above are correct. ____ 18. The Fed can increase the price level by conducting open market a. sales and raising the discount rate. b. sales and lowering the discount rate. c. purchases and raising the discount rate. d. purchases and lowering the discount rate. ____ 19. Suppose that banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 10%. If you deposit $3,000 into First Hawkeye Bank, a. Hawkeye's required reserves increase by $300. b. Hawkeye will be able to lend out $2,700. c. Hawkeye's assets and liabilities will both increase by $3,000. d. All of the above are correct. ____ 20. If the reserve ratio is 5 percent, $1,000 of additional reserves can create a. $200 of new money. b. $2,000 of new money. c. $20,000 of new money. d. None of the above is correct. Tazian Banking Statistics The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit of currency is the Taz. Aggregate banking statistics show that collectively the banks of Tazi hold 300 million Tazes of required reserves, 75 million Tazes of excess reserves, have issued 7,500 million Tazes of deposits, and hold 225 million Tazes of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all currency is on deposit at the bank. ____ 21. Refer to Tazian Banking Statistics. Suppose that the Bank of Tazi loaned the banks of Tazi 10 million Tazes. Suppose also that both the required reserve ratio and the percentage of deposits held as excess reserves stay the same. By how much would the money supply change? a. 250 million Tazes b. 200 million Tazes c. 125 million Tazes d. None of the above is correct. ____ 22. Which of the following lists two things that both increase the money supply? a. the Fed buys bonds and lowers the discount rate b. the Fed buys bonds and raises the discount rate c. the Fed sells bonds and lowers the discount rate d. the Fed sells bonds and raises the discount rate ____ 23. When the Fed decreases the discount rate, banks will a. borrow more from the Fed and lend more to the public. The money supply increases. b. borrow more from the Fed and lend less to the public. The money supply decreases. c. borrow less from the Fed and lend more to the public. The money supply increases. d. borrow less from the Fed and lend less to the public. The money supply decreases. 3 Name: ________________________ ID: A ____ 24. If the public decides to hold less currency and more deposits in banks, bank reserves a. decrease and the money supply eventually decreases. b. decrease but the money supply does not change. c. increase and the money supply eventually increases. d. increase but the money supply does not change. ____ 25. If people decide to hold more currency relative to deposits, the money supply a. falls. The Fed could lessen the impact of this by buying Treasury bonds. b. falls. The Fed could lessen the impact of this by selling Treasury bonds. c. rises. The Fed could lessen the impact of this by buying Treasury bonds. d. rises. The Fed could lessen the impact of the by selling Treasury bonds. ____ 26. When the money market is drawn with the value of money on the vertical axis, if the value of money is below the equilibrium level, a. the price level will rise. b. the value of money will rise. c. money demand will shift left. d. money demand will shift right. ____ 27. When the money market is drawn with the value of money on the vertical axis, the price level increases if a. either money demand or money supply shifts right. b. either money demand or money supply shifts left. c. money demand shifts right or money supply shifts left. d. money demand shifts left or money supply shifts right. Use the figure below for the following questions. Figure 30-1 ____ 28. Refer to Figure 30-1. If the money supply is MS2 and the value of money is 2, a. the value of money is less than its equilibrium level. b. the price level is higher than its equilibrium level. c. the quantity of money demanded is greater than the quantity of money supplied. d. the quantity of money supplied is greater than the quantity of money demanded. ____ 29. Refer to Figure 30-1. If the current money supply is located at MS1, a. there is no excess supply or excess demand if the value of money is 2. b. the equilibrium is at point C. c. there is an excess supply of money if the value of money is 1. d. None of the above is correct. 4 Name: ________________________ ID: A ____ 30. Suppose that velocity rises while the money supply stays the same. It follows that a. P x Y must rise. b. P x Y must fall. c. P x Y must be unchanged. d. the effects on P x Y are uncertain. ____ 31. The nominal interest rate is 3 percent and the inflation rate is 2 percent. What is the real interest rate? a. 6 percent b. 5 percent c. 1.5 percent d. 1 percent ____ 32. As inflation rises, people will tend to a. go to the bank more often. This is known as menu costs. b. go to the bank more often. This is known as shoeleather costs. c. go to the bank less often. This is known as the inflation fallacy. d. go to the bank less often. This is known as redistribution costs. ____ 33. You buy a stock and its price rises less than the price level. Before taxes you made a. a nominal and real gain, and you pay taxes on the nominal gain. b. a nominal gain and a real loss, and you don't have to pay taxes since you gained less than the change in the price level. c. a nominal and a real gain, and you pay taxes on the real gain. d. a nominal gain and a real loss, and you pay taxes on the nominal gain. ____ 34. Given a nominal interest rate of 6 percent, in which case would you earn the highest after-tax real rate of interest? a. Inflation is 4 percent; the tax rate is 25 percent. b. Inflation is 3 percent; the tax rate is 20 percent. c. Inflation is 2 percent; the tax rate is 15 percent. d. The after-tax real interest rate is the same for all of the above. ____ 35. High and unexpected inflation has a greater cost a. for those who save than those who borrow. b. for those who hold a little money than for those who hold a lot of money. c. for those whose wages increase by as much as inflation, than those who are paid a fixed nominal wage. d. for savers in low income tax brackets than for savers in high income tax brackets. ____ 36. When Dee, a U.S. citizen, purchases a designer dress made in Milan, the purchase is a. both a U.S. and Italian import. b. a U.S. export and an Italian import. c. a U.S. import and an Italian export. d. neither an export nor an import for either country. ____ 37. Juan lives in Ecuador and purchases a motorcycle manufactured in the United States. The motorcycle is a. both a U.S. and Ecuadorian export. b. both a U.S. and Ecuadorian import. c. a U.S. import and an Ecuadorian export. d. a U.S. export and an Ecuadorian import. ____ 38. Net exports measures the difference between a country's a. income and expenditures. b. sale of goods and services abroad and purchase of foreign goods and services. c. sale of domestic assets abroad and purchase of foreign assets. d. All of the above are correct. 5 Name: ________________________ ID: A ____ 39. An appreciation of the U.S. real exchange rate induces U.S. consumers to buy a. fewer domestic goods and fewer foreign goods. b. more domestic goods and fewer foreign goods. c. fewer domestic goods and more foreign goods. d. more domestic goods and more foreign goods. ____ 40. When the yen gets "stronger" relative to the dollar, a. the U.S. trade deficit with Japan will rise. b. the U.S. trade deficit with Japan will fall. c. the U.S. trade deficit with Japan will be unchanged. d. None of the above necessarily happens. ____ 41. If the quantity of loanable funds supplied is greater than the quantity demanded, then a. there is a shortage of loanable funds and the interest rate will fall. b. there is a shortage of loanable funds and the interest rate will rise. c. there is a surplus of loanable funds and the interest rate will fall. d. there is a surplus of loanable funds and the interest rate will rise. ____ 42. In the open-economy macroeconomic model, which of the following would make India's net capital outflow decrease? a. a decrease in U.S. interest rates. b. a decrease in Indian interest rates. c. an appreciation of the Indian rupee. d. None of the above is correct. ____ 43. Suppose that the government of Syria raises its budget deficit. The real exchange rate of the Syrian pound would a. depreciate and Syrian net exports would rise. b. depreciate and Syrian net exports would fall. c. appreciate and Syrian net exports would rise. d. appreciate and Syrian net exports would fall. ____ 44. In the 1980s, the U.S. government budget deficit rose. At the same time the U.S. trade deficit grew larger, the real exchange rate of the dollar appreciated, and U.S. net capital outflow decreased. Which of these events is contrary to what the open-economy macroeconomic model predicts concerning the effects of an increase in the budget deficit? a. The U.S. trade deficit grew. b. The real exchange rate of the dollar appreciated. c. U.S. net capital outflow fell. d. None of the above is contrary to the predictions of the model. ____ 45. If the U.S. were to impose restrictions on imports a. the demand for loanable funds and the demand for dollars in the market for foreign-currency exchange would both increase. b. nether the demand for loanable funds nor the demand for dollars in the market for foreign-currency exchange would increase. c. the demand for loanable funds would increase, but the demand for dollars in the market for foreign-currency exchange would not. d. the demand for dollars in the market for foreign-currency exchange would increase, but the demand for loanable funds would not. ____ 46. If the United States imposes an import quota on clothing, U.S. exports a. increase, U.S. imports increase, and U.S. net exports are unchanged. b. increase, U.S. imports decrease, and U.S. net exports increase. c. decrease, U.S. imports increase, and U.S. net exports decrease. d. decrease, U.S. imports decrease, and U.S. net exports are unchanged. 6 Name: ________________________ ID: A ____ 47. Suppose that the U.S. imposes an import quota on automobiles. The quota makes the real exchange rate of U.S. dollars a. appreciate but does not change the real interest rate in the United States. b. appreciate and the real interest rate in the United States increase. c. depreciate and the real interest rate in the United States decrease. d. depreciate but does not change the real interest rate in the United States. ____ 48. When Mexico suffered from capital flight in 1994, Mexico's net exports a. decreased. b. did not change. c. increased. d. decreased until the peso appreciated, then increased. ____ 49. Which of the following is most likely to result if foreigners decide to withdraw the funds that they have loaned to the United States over the past two decades? a. U.S. net exports rise. will b. U.S. saving will rise. c. U.S. domestic investment will rise. d. the dollar will appreciate. ____ 50. Which of the following would cause the real exchange rate of the U.S. dollar to depreciate? a. the U.S. government budget deficit increases b. capital flight from the United States c. the U.S. imposes import quotas d. None of the above is correct. Short Answer 51. Why have labor-force participation rates for women in the United States increased since World War II while labor-force participation rates for men have decreased? 52. If the reserve ratio is 20 percent, how much money can be created from $100 of reserves? Show your work. 53. During the early 1930s there were a number of bank failures in the United States. What did this do to the money supply? The New York Federal Reserve Bank advocated open market purchases. Would these purchases have reversed the change in the money supply and helped banks? Explain. 54. Suppose that velocity and output are constant and that the quantity theory and the Fisher effect both hold. What happens to inflation, real interest rates, and nominal interest rates when the money supply growth rate increases from 5 percent to 10 percent? 55. List and define any two of the costs of high inflation. 56. What is the logic behind the theory of purchasing-power parity? 57. Suppose that a U.S. dollar buys more gold in Australia than it buys in Russia. What does purchasing-power parity imply should happen? 58. Under what circumstances does purchasing-power parity explain how exchange rates are determined, and why is it not completely accurate? 59. Suppose the U.S. government institutes a "Buy American" campaign, in order to encourage spending on domestic goods. What effect will this have on the U.S. trade balance? 7 Name: ________________________ ID: A 60. Illustrate the Loanable Funds Diagram in the Open Economy Framework. Label the intial equilibrium as (r0,LF0). How do the two components of net capital outflows enter the demand curve and supply curve? What is the impact on the loanable funds market when the country is running a trade deficit? Explain intuitively and show graphically. 61. Suppose that the labor market is in equilibrium and unemployment is at UEn. Iluustrate and label (W0,L0=Ln) where W is the real wage? What happens when the economy goes into a recession in the short-run? What happens to W, L, Ln, UE, and UEn? 62. Describe the Equilibrium in the Foreign Currency Exchange (FX) Market between Hippoland and Sheepistan. The respective currencies are Rands and Scots. Assume that Sheepistan is your domestic economy. Illustrate and label the diagram for the FX market showing the equilibrium real exchange rate (E= you fill in) and equilibrium quantity of Scots. Suppose the Central Bank of Hippoland blows a lot of hot air, rapidly expanding the money supply and increasing inflation. Explain and illustrate what happens in the FX. Does the Scot appreciate or depreciate? 63. Illustrate the Loanable Funds Diagram in the Open Economy Framework. Label the intial equilibrium as (r0,LF0). There has been turmoil, increased uncertainty, defaults by borrowers in the credit markets Loanable Funds markets. Explain illustrate what is happening be sure to label any shifts in curves and the new equilibrium. 64. This is a follow on to the previous question about a domestic credit crisis. Now we link the loanable funds market to the Foreign Exchange Currency (FX) Market. a) Given the intial equilibrium (r0,LF0), you can map this to a real interest rate and NCO relationship. Based on your previous answer is there a movement along the NCO curve or a shift in the curve? Illustrate and explain. b) Given the intial equilibrium (r0,LF0), there is a mapping to the NCO - r relation AND the real exchange rate (E) and quantity of domestic currency in the FX market. Illustrate the intial equilibrium (E0,$0). Based on your answer in part a) what happens in the FX market, Explain and illustrate and shift and new equilibrium. c) What has been the impact of any change in E on exports, imports, and net exports? Explain why? 8 ID: A Test 2 Practice Answer Section MULTIPLE CHOICE 1. Register to View AnswerDIF: 2 REF: 28-1 TOP: Labor-force participation rate, Unemployment rate 2. Register to View Answer. DIF: MSC: ANS: MSC: ANS: MSC: ANS: MSC: ANS: MSC: ANS: TOP: ANS: MSC: ANS: MSC: ANS: MSC: ANS: MSC: ANS: MSC: ANS: MSC: ANS: MSC: ANS: MSC: ANS: MSC: ANS: MSC: ANS: MSC: ANS: MSC: MSC: Applicative 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 3 REF: 28-1 TOP: Labor-force participation rate, Unemployment rate Analytical C DIF: 1 REF: 28-1 TOP: Labor-force demographics Definitional C DIF: 2 REF: 28-1 TOP: Labor-force demographics Definitional C DIF: 2 REF: 28-1 TOP: Unemployment spells Definitional C DIF: 1 REF: 28-1 TOP: Job search Definitional B DIF: 1 REF: 28-3 Structural unemployment, Frictional unemployment MSC: Interpretive B DIF: 1 REF: 28-4 TOP: Unions Applicative C DIF: 2 REF: 28-5 TOP: Efficiency wages Interpretive A DIF: 1 REF: 29-1 TOP: Medium of exchange Definitional B DIF: 1 REF: 29-1 TOP: Commodity money, Fiat money Definitional A DIF: 1 REF: 29-1 TOP: Fiat money Definitional A DIF: 1 REF: 29-1 TOP: Legal tender requirement Definitional C DIF: 1 REF: 29-1 TOP: M1, M2 Definitional B DIF: 1 REF: 29-1 TOP: M1, M2 Definitional B DIF: 1 REF: 29-2 TOP: Federal Reserve Definitional B DIF: 1 REF: 29-2 TOP: Federal Reserve Definitional D DIF: 3 REF: 29-2 TOP: Open-market operations Definitional D DIF: 2 REF: 29-2 TOP: Reserves Applicative 1 ID: A 20. ANS: MSC: 21. ANS: MSC: 22. ANS: MSC: 23. ANS: MSC: 24. ANS: TOP: 25. ANS: TOP: 26. ANS: MSC: 27. ANS: MSC: 28. ANS: MSC: 29. ANS: MSC: 30. ANS: MSC: 31. ANS: TOP: 32. ANS: MSC: 33. ANS: MSC: 34. ANS: MSC: 35. ANS: TOP: 36. ANS: MSC: 37. ANS: MSC: 38. ANS: MSC: 39. ANS: MSC: 40. ANS: MSC: 41. ANS: MSC: 42. ANS: TOP: MSC: C DIF: 1 REF: 29-3 TOP: Applicative B DIF: 2 REF: 29-3 TOP: Applicative A DIF: 2 REF: 29-3 TOP: Applicative A DIF: 2 REF: 29-3 TOP: Interpretive C DIF: 2 REF: 29-3 Money multiplier and currency holdings MSC: A DIF: 3 REF: 29-3 Money multiplier and currency holdings MSC: B DIF: 1 REF: 30-1 TOP: Analytical D DIF: 2 REF: 30-1 TOP: Applicative D DIF: 2 REF: 30-1 TOP: Analytical A DIF: 1 REF: 30-1 TOP: Applicative A DIF: 2 REF: 30-1 TOP: Applicative D DIF: 1 REF: 30-1 Nominal interest rate, Real interest rate MSC: B DIF: 2 REF: 30-2 TOP: Analytical D DIF: 2 REF: 30-2 TOP: Analytical C DIF: 2 REF: 30-2 TOP: Applicative A DIF: 2 REF: 30-2 Redistributional effects of unexpected inflation MSC: C DIF: 1 REF: 31-1 TOP: Definitional D DIF: 1 REF: 31-1 TOP: Definitional B DIF: 1 REF: 31-1 TOP: Definitional C DIF: 1 REF: 31-2 TOP: Applicative B DIF: 2 REF: 31-2 TOP: Applicative C DIF: 2 REF: 32-1 TOP: Analytical A DIF: 2 REF: 32-2 Net capital outflow, Open-economy macroeconomic model Applicative Money multiplier Reserve ratio Reserves Discount rate Applicative Applicative Money market Money market Money market Money market Velocity Applicative Shoeleather costs Inflation-induced tax distortions After-tax real interest rate Interpretive Imports, Exports Exports, Imports Net exports Appreciation, Real exchange rate Depreciation, Real exchange rate Market for loanable funds 2 ID: A 43. ANS: TOP: 44. ANS: TOP: 45. ANS: TOP: 46. ANS: TOP: 47. ANS: TOP: 48. ANS: MSC: 49. ANS: TOP: 50. ANS: TOP: D DIF: 2 REF: 32-3 Budget deficit, Open-economy macroeconomic model D DIF: 3 REF: 32-3 Open-economy macroeconomic model, U.S. trade D DIF: 3 REF: 32-3 Trade policy, Open-economy macroeconomic model D DIF: 2 REF: 32-3 Trade policy, Open-economy macroeconomic model A DIF: 3 REF: 32-3 Trade policy, Open-economy macroeconomic model C DIF: 2 REF: 32-3 Definitional A DIF: 3 REF: 32-3 Capital flight, Open-economy macroeconomic model B DIF: 3 REF: 32-3 Open-economy macroeconomic model MSC: Analytical MSC: Analytical MSC: Applicative MSC: Analytical MSC: Analytical TOP: Capital flight MSC: Analytical MSC: Analytical SHORT ANSWER 51. ANS: Labor-force participation rates for women have increased largely as a result of a change in the attitude of society toward women working outside the home and the concomitant increase in educational and vocational opportunities for women. Advances in birth control have made it possible for women to stay in the labor force longer. Labor-force participation rates for men have decreased because young men now stay in school longer than they used to, older men now retire earlier and live longer, and more fathers now stay at home to raise their children. DIF: 2 REF: 28-1 MSC: Definitional 52. ANS: (1/.20) $100 = $500. TOP: Labor-force demographics DIF: 1 REF: 29-3 TOP: Money multiplier MSC: Applicative 53. ANS: Bank failures cause people to lose confidence in the banking system so that deposits fall and banks have less to lend. Further, under these circumstances banks are probably more cautious about lending. Both of these reactions would tend to decrease the money supply. Open market purchases increase bank reserves and so would have at least made the decrease smaller. The increase in reserves would also have provided banks with greater liquidity to meet the demands of customers who wanted to make withdrawals. In short, while the actions of depositors and banks lowered the money supply, the Fed could have increased it by buying bonds. DIF: 3 REF: 29-3 TOP: Monetary policy, Open-market operations MSC: Analytical 54. ANS: Inflation and nominal interest rates each increase by 5 percent points. There is no change in the real interest rate or any other real variable. DIF: 1 REF: 30-1 TOP: Inflation 3 MSC: Analytical ID: A 55. ANS: The costs include: Shoeleather costs: the resources wasted when inflation induces people to reduce their money holdings. Menu costs: the cost of more frequent price changes at higher inflation rates. Relative Price Variability: because prices change infrequently, higher inflation causes relative prices to vary more. Decisions based on relative prices are then distorted so that resources may not be allocated efficiently. Inflation Induced Tax Distortions: the income tax is not completely indexed for inflation; an increase in nominal income created by inflation results in higher real tax rates that discourage savings. Confusion and Inconvenience: inflation decreases the reliability of the unit of account making it more complicated to differentiate successful and unsuccessful firms thereby impeding the efficient allocation of funds to alternative investments. Unexpected Inflation: inflation decreases the real value of debt thereby transferring wealth from creditors to debtors. DIF: 1 REF: 30-2 TOP: Inflation costs MSC: Definitional 56. ANS: The logic behind purchasing-power parity is the law of one price, which asserts that a good must sell for the same price in all locations. If the price for a good is higher in one market than in another, someone can make a profit by purchasing the good where it is relatively cheap, and selling the good where it is relatively expensive. This process of arbitrage leads to an equalization of prices for the good in all locations. If purchasing power parity holds the amount of dollars it takes to buy a good in the U.S. should buy enough foreign currency to buy the same good in a foreign country. DIF: 2 REF: 31-3 TOP: Arbitrage, Purchasing-power parity MSC: Analytical 57. ANS: People can make a profit by buying gold in Australia and selling it in Russia. Purchases in Australia drive down the amount of gold a dollar can buy there. Sales in Russia drive up the amount of gold a dollar can buy there. Purchasing-power parity theory claims that this should continue until the dollar can buy the same amount of gold anywhere. DIF: 2 REF: 31-3 TOP: Arbitrage, Purchasing-power parity MSC: Analytical 58. ANS: Purchasing-power parity works well in helping us explain long-term trends in exchange rates, and in explaining what happens to exchange rates during hyperinflation. It is not completely accurate because (1) not all goods are easily traded, and (2) even tradable goods are not always perfect substitutes when they are produced in different countries. DIF: 2 MSC: Interpretive REF: 31-3 TOP: Purchasing-power parity 4 ID: A 59. ANS: Such a campaign will increase the demand for domestically produced goods and hence decrease the demand for imports. This increases the demand for dollars in the market for foreign currency. The real exchange rate of the U.S. dollar will appreciate, and the net effect will be no change in the trade balance. The level of net exports ultimately depends upon domestic saving and investment, neither of which are affected by the campaign. DIF: 2 REF: 32-3 TOP: Trade policy, Open-economy macroeconomic model MSC: Analytical 60. ANS: Use the LF definition LFs = Sp + Sg + Sw or Sp + Sg + CI and LFd = I + CO Sn = I + NX = I + NCO and provide the intuition Draw the graph, show the equilibrium points. Then conduct your analyses. 61. ANS: Ask yourself which curve shifts and in which direction? Show the shift and label the new equilibrium. Note the question suggests this is a short-run situtation. 62. Register to View Answer= e * (Pdom / Pfor) = Rand(s) / Scot * (PSheepistan / PHippoland ) NX = Demand for Scots = NCO = Supply of Scots What happens to E when there is inflation in Hippoland? Which curve does this affect? What happens to E, NX, and NCO from the initial equilibrium? 63. ANS: Recall that we can define LFs = Sp + Sg + CI (Sw) = I + CO = LFd Lenders are concerned about the riskiness of their loans. They will be more cautious and require a higher risk premium from the borrowers. Sp declines at every r. Also, foreigners are less likely to invest in the economy. this leads to a fall in CI and a rise in NCO. The LFs shifts back to (r1,LF1) where r1 > r0 and LF1 < LF0. There is a "credit crunch"; it is harder to obtain loanable funds. 64. Register to View AnswerShow the inverse relationship between NCO and r. That is a rise in r leads to a decline in quantity "demanded" of capital outflows. Link this to the equilibrium r0 from the previous question to find (r0,NCO0). b) There is a shift in NCO because factors affecting the LF curve(s) have changed causing them to shift. In this case NCO increased primarily because CI has fallen. Thus there is a shift out in the supply curve of domestic currency in the FX market. The excess supply causes a depreciation in E. c) In the short run a decline in E may cause NX to fall. Ultimately (most important) the decline in E makes exports more competitive x increases. Imports call as foreign goods become more expensive and domestic goods relatively cheaper. This leads to an improvement in NX. 5 Test 2 Practice [Answer Strip] B _____ 8. B _____ 17. C _____ 24. A _____ 30. ID: A C _____ 1. D _____ 18. C _____ 9. A _____ 25. D _____ 31. D _____ 19. A _____ 10. B _____ 2. B _____ 26. B _____ 32. D _____ 33. B _____ 11. C _____ 20. D _____ 27. C _____ 3. A _____ 12. C _____ 34. C _____ 4. A _____ 13. A _____ 35. B _____ 21. C _____ 5. C _____ 14. C _____ 36. C _____ 6. B _____ 15. A _____ 22. D _____ 28. D _____ 37. B _____ 7. B _____ 16. A _____ 23. A _____ 29. B _____ 38. Test 2 Practice [Answer Strip] C _____ 39. A _____ 47. ID: A B _____ 40. C _____ 48. C _____ 41. A _____ 49. A _____ 42. B _____ 50. D _____ 43. D _____ 44. D _____ 45. D _____ 46.

Textbooks related to the document above:

Find millions of documents on Course Hero - Study Guides, Lecture Notes, Reference Materials, Practice Exams and more. Course Hero has millions of course specific materials providing students with the best way to expand their education.

Below is a small sample set of documents:

GWU - STAT - 053
GWU - MATH - 051
~/*-~(051 -II)f&quot;1&quot;'TH=I/=.b0377.~t~ (.2.0-0H'-~1:o~~c:A-L-~e-8~A8c.c. IM.u.EL'o,-e.I ?QJ'-~~du.'Q\. ~.C. . 0 M Eo. R. ~ Tn.~'&quot; 3 c:ro I~ C.IN-&quot;*~~t'~\.&quot;'1&lt;&quot;'+0~*A.:D:r:1~D~Co~.I-~,/~
GWU - STAT - 053
GWU - SOC - 001
What is Sociology? Sociology is the scientific study of social structure and social interactionand the factors making for change in social structure and social interaction. The systematic and scientific study of human social behavior Sociologist
GWU - STAT - 053
GWU - STAT - 053
GWU - STAT - 053
GWU - STAT - 053
GWU - STAT - 053
GWU - STAT - 053
Embry-Riddle FL/AZ - PS - 107L
LAB #3 1. Longest Stage of mitosis _prophase_. 2. Shortest stage of mitosis _anaphase_. 3. Diagram all stages of mitosis actively dividing (on a separate sheet of paper in color). - On next page 4. What occurs in the interphase stage? - Duplication o
GWU - STAT - 053
Baylor - M - 1
15SMaintenanceMcGraw-Hill/IrwinCopyright 2007 by The McGraw-Hill Companies, Inc. All rights reserved.Learning Objectives Explain the importance of maintenance in production systems Describe the range of maintenance activities Discuss prev
Embry-Riddle FL/AZ - PS - 107L
It all began in March the year of 1995, two of the nation's top ranked defense contractors merged; Lockheed Corporation and Martin Marietta Corporation together formed the world's largest defense contractor. According to &quot;Lockheed Martin Corporation&quot;
New Hampshire - ECE - 543
Lab #3; THE UNIVERSAL LOGIC GATE 9-27-07 Name: Jeff Rose Objective: The objective of this experiment is to become familiar with the logic gates which are available to the digital designer. Performing this laboratory exercise will help the student bec
New Hampshire - ECE - 543
Figure for problem 3-16
New Hampshire - ECE - 543
EE543 Introduction to Digital Systems1LABORATORY #3THE UNIVERSAL LOGIC GATEOBJECTIVE:The objective of this experiment is to become familiar with the logic gates which are available to the digital designer. Performing this laboratory exercise w
New Hampshire - ECE - 543
EE543 Introduction to Digital SystemsLABORATORY #7Data Storage RegistersOBJECTIVE:The objective of this laboratory is to data storage and manipulation in storage registers.EQUIPMENT REQUIRED:IDL-800 Digital Lab Wire Leads 1 Logic Probe 1 741
New Hampshire - ECE - 543
SN54174, SN54175, SN54LS174, SN54LS175, SN54S174, SN54S175, SN74174, SN74175, SN74LS174, SN74LS175, SN74S174, SN74S175 HEX/QUADRUPLE D-TYPE FLIP-FLOPS WITH CLEARSDLS068A DECEMBER 1972 REVISED OCTOBER 2001PRODUCTION DATA information is current as
Marquette - PHIL - 104
Name:MIDTERM EXAM 4O POINTS First and foremost don't forget to WRITE YOUR NAME. For each question, write in the space provided; this is &quot;short answer&quot; NOT essay Partial credit can be earned on each question. Be sure you understand the question, if
Marquette - ARSC - 10
April 20, 2007 ARSC 011 Lab No. 10 Lab No. 10 Earth's Seasons and Lunar Cycles 1. A Reason for the Seasons When it's summer here in Milwaukee, WI, it's actually winter in Buenos Aries, Argentina, and vice versa in the winter. This is because seasons
Marquette - ARSC - 10
ARSC 010 Lab Sec. 2009 October 3, 2007 Formal Lab Report for Lab 4 Heat Transfer and Freezing Point Depression Process: The purpose of this lab is to understand the concepts of heat transfer and freezing point. More specifically, its purpose is to ex
Marquette - ARSC - 10
ARSC 010 October 24 2007 Mini-Lab Report for Lab 6 Circuits, Ohm's Law and Capacitance 1. Series Circuits and Ohm's Law Figure 1.1Figure 1.1 Legend= Voltage [volts]= Resistor [ohms] 2VM= Voltmeter [measures]2 Ohm's Law Calculations for Figu
Marquette - ARSC - 10
Another real-life example of a pulley as a simple machine is an elevator. When people enter a building taller than oneMini-Lab Report for Lab 2 story, they often need an easier way to reach the floors above. Simple Machines, Work, and Motion Would yo
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 3-54p210MEMO TO: FROM: DATE: SUBJECT:Ana Pacheco Liang Quan June 26, 2008 Desktop Publishing CertificateOur DTP certificate Seminar will be held in St. Louis on August 14. Upon request of last year's participants, we want to be sure
University of Texas - CMS - 315M
Break UpsI. Stages of Breaking Up A. Denial &amp; Disillusionment B. Erosion &amp; Anger C. Bargaining D. DetachmentE. Separation1. Preknowledge 2. Mutual vs. Single 3. GenderF. G. H. I.Attempted Recovery Mourning Restructuring AcceptanceII. Why pe
University of Texas - CMS - 315M
Centrality of CommunicationI. Centrality of CommunicationII. Importance of the First ExchangeCentrality of CommunicationIII. Why Do People Meet and Talk? A. ProximityB. Appearance C. UtilityD. LonelinessCentrality of CommunicationIV. Why
University of Texas - CMS - 315M
ChangeI. Creating ChangeA. People want consistency&quot;Lite&quot; Beer?+John+Famous AthletesChangeGod term++Other?What you wantB. People don't want to be forced; don't push too hardII. Manipulating Messages A. Evidence B. Fear A
University of Texas - CMS - 315M
Charisma I. How do we define it? A. Perceived B. Hard to defineII. Why study it? A. Exposure B. Attention C. Retention D. InfluenceIII. Dimensions of Charisma A. Credibility 1. Competence Mod-Higha. Product: About Topic b. Process: Communicating
University of Texas - CMS - 315M
Charisma part 2 III. Dimensions of Charisma A. Credibility B. Similarity 1. Background Similarity 2. Attitude Similarity 3. Optimal SimilarityC. Attraction 1. Task Attraction 2. Social Attraction 3. Physical AttractionPhysical Attraction 1. Perce
FSU - ENC - 1102
Phillips 1 Annotated Bibliography&quot;50 Cent Lyrics.&quot; Azlyrics. 26 Feb. 2008 &lt;http:/www.azlyrics.com/lyrics/50cent/ayotechnology.html&gt;. These lyrics talk about what a guy is thinking while watching a girl dance in a club. The rapper is talking about h
FSU - ENC - 1102
Getting to Start the Draft1. Getting Starteda. When to start your draft i. Early 1. Makes experience a positive one 2. Allows time to see different angles ii. Last Minute 1. Confuse relief with success 2. Often aren't successful - A lot of time st
FSU - ENC - 1102
Phillips 1 Annotated Bibliography&quot;50 Cent Lyrics.&quot; Azlyrics. 26 Feb. 2008 &lt;http:/www.azlyrics.com/lyrics/50cent/ayotechnology.html&gt;. These lyrics talk about what a guy is thinking while watching a girl dance in a club. The rapper is talking about h
FSU - EDG - 2701
Subject Area: 6th Grade-Social Studies Title of Lesson: African American Culture- Coming to America Goals: After being taught the lesson, the students will know how Africans were captured and brought to the Americas. They will understand the pain and
FSU - EDG - 2701
EDG2701 Test 1 Short Answers101) A multicultural school is not just a school whose students come from different backgrounds. Being a multicultural school means effectively teaching students from different backgrounds. In a multicultural school, the
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 63-60-p224 MEMO TO: FROM: DATE: SUBJECT: Edo Dorati, Cabaret Pops Conductor Sam Steele, Executive Director March 2, 2008 Irving Berlin ConcertOur Patron Program Advisory Committee recommends in its attached letter that the Irving Berlin
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 35-17p100MEMO TO: FROM: DATE: SUBJECT:All Executive Assistants Barbara Azar, Staff Developmetn Coodinator March 24, 2008 Standardizing Document FormatsLast month we received our final shipment of new laser printer. The installation o
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 35-18p101MEMO TO: FROM: DATE: SUBJECT:Barbara Azar, Staff Development Coordinator Sharon Hearshen, Executive Assistant April 3, 2008 Laser Printer WorkshopThe new laser printers we received are fabulous! I know that you worked very h
Wisconsin Milwaukee - OFTECH - 133
Oftech 133 34-15p98MEMO TO: FROM: DATE: SUBJECT:Amy Vigil, Human Resources Dan Westphal November 23, 2008 MedNet Benefit PlanThank you for the brochure detailing the various options for employees under the MedNet plan. I would like clarificatio
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 48-29p157MEMO TO: FROM: DATE: SUBJECT:Charles A. Cronelius, President Alfred A. Long, Convention Director September 8, 2008 Conventions LocationsAs you know, this year's conventions will meet in Jacksonville, Florida. It is the Execu
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 48-27p156MEMO TO: FROM: DATE: SUBJECT:Charles A. Cronelius, President Alfred A. Long, Convention Director September 8, 2008 Conventions LocationsAs you know, this year's conventions will meet in Jacksonville, Florida. It is the Execu
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 48-28p157MEMO TO: FROM: DATE: SUBJECT:Marcia Davis Alex Pera April 9, 2008 Program DescriptionsAs you requested, I have contacted the speakers for our afternoon session discussions. All three speakers have sent me a brief description
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 63-61-p224 MEMO TO: FROM: DATE: SUBJECT: Dolly Carpenter, Rehearsals Coordinator Sam Steele, Executive Director March 3, 2008 Summon Cabaret Pops ConcertsWe are pleased that you will be our rehearsals coordinator for this summer's Cabare
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 74-73p273MEMO TO: FROM: DATE: SUBJECT:L. B. Chinn, Station Manager Mitzi Grenell, News Director May 5, 2008 FCC European TripAs you requested, this memo is being sent to you as one in a series to keep you informed about my upcoming t
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 91-89p352 MEMO TO: FROM: DATE: SUBJECT: Dr. Abraham Kramer Paula Campbell November 1, 2008 Radiology Lab ClosingNext week the Radiology Lab in Building D will be closed for repairs. I realize that this is the week you were going to take
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 32-6p89October 10, 2008Ms. Denise Bradford Worldwide Travel, Inc 1180 Alvarado, SE Albuquerque, NM 87108 Dear Ms. Bradford: Our company has decided to hold its regional sales meeting in Scottsdale, Arizona, during the second week of Ja
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 98-96p380 MEMO TO: FROM: DATE: SUBJECT: Raymond Ruiz Charlotte Libretto December 28, 2008 Client ListingAs you requested, I am enclosing an up-to-date new client list for our Atlanta area clients. This list is current as of this week, an
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 63-58p223 MEMO TO: FROM: DATE: SUBJECT: Frank Janowicz, Ticket Manager Sam Steele, Executive Director March 1, 2008 Ticket Sales CampaignWe tentatively have scheduled 114 concerts for Orchestra Hall for the calendar year beginning Septem
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 31-5p87May 25, 2008Ms. Linda Lopez Account Manager The Internet Connection 7625 Maple Avenue Pomona, CA 91765 Dear Ms, Lopez: Thank you so much for hosting the educational seminar last Tuesday that focused on the topic of high-speed In
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 31-4p87February 8, 2008Gail Madison Technology Engineer The Internet Connection 7625 Maple Avenue Pomona, CA 91765 Dear Ms. Lopez: Our company is interested in hosting an educational seminar this spring that will focus on meeting the g
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 31-3p86January 27, 2008Ms. Linda Lopez Account Manager The Internet Connection 7625 Maple Avenue Pomona, CA 91765 Dear Ms. Lopez: Our company is interested in hosting an educational seminar this spring that will focus on meeting the gr
Wisconsin Milwaukee - OFTECH - 133
34-14p97MEMO TO: All Salaried Employees FROM: DATE: SUBJECT: Amy Vigil, Human Resources November 2, 2008 Health Care Benefit PlanEffective January 1, Allied Aerospace Industries will Contract with MedNet to begin a new health benefits program for
Wisconsin Milwaukee - OFTECH - 133
34-16p97MEMO TO: All Allied Aerospace Industries Employees FROM: DATE: SUBJECT: Amy Vigil, Human Resources December 2, 2008 Health Care Open Enrollment PeriodEffective January 1, Allied Aerospace Industries will Contract with MedNet to begin a ne
Wisconsin Milwaukee - OFTECH - 133
OfTech 133 32-7p90October 10, 2008Ms. Denise Bradford Worldwide Travel, Inc 1032 San Pedro, SE Albuquerque, NM 87108 Dear Ms. Bradford: Our company has decided to hold its annual national sales meeting during the first week of February in Scottsd
University of Texas - CMS - 315M
Charisma, part 3 (review)III. Dimensions of Charisma A. Credibility B. Similarity C. AttractionD. Perceived Sensitivity 1. Listening-Listen to tell someone else what was said -Eliminate distractions -Reformulate (e.g., Internal summaries) -Limit
University of Texas - CMS - 315M
Communication Model I. Definition &quot;Interpersonal Communication is the process whereby one stimulates meaning in the mind of another through verbal and/or nonverbal means.&quot;II. Model of CommunicationSourceII. Model of CommunicationEncoding Sour
University of Texas - CMS - 315M
Death &amp; DyingI. Fear of Death A. Suffering B. Humiliation C. Extinction D. Loss of loved onesE. Changes in Society 1. Reduced religiosity 2. Lower social support 3. Fewer rituals 4. Less publicnessII. Coping with Death A. Subterfuge B. Denial C.
University of Texas - CMS - 315M
Enduring RelationshipsI. CharacteristicsA. Variability B. DurationC. FrequencyD. RevelationE. MeshingF. Mutually Interdependent G. Anxiety Reduction (security)H. ProximityI. Relationships are SystemicJ. Momentum &amp; Trajectory K. Ritual
Uni. Tartu - LAW - 101
Bankruptcy Introduction to the Bankruptcy Code o Chart page 8 o Definitions see code 101 o Official Forms 1 8 - bankruptcy code book o Dollar amount changes Jurisdiction o 28 U.S.C, 151 152 o 157 . 157. Procedures (a) Each district court may pro
Uni. Tartu - LAW - 101
Evidence Outline Borenstein / Summer 2006EVIDENCE OUTLINE: TABLE OF CONTENTSGENERAL PRINCIPLES OF RELEVANCE. 1PROBATIVENESS AND MATERIALITY.. 1FRE 401: Definition of &quot;Relevant Evidence&quot; . 1 FRE 401 Notes.. 1 FRE 402: Evidence Generally Admissib
Uni. Tartu - LAW - 101
Family Law Dalton - Fall 2006 INTRODUCTION AND DEFINITIONS (OR THEIR ABSENCE). 5 MARRIAGE AND FAMILY WHAT FOR? .. 5 Why marriage?. 5 State interests .. 5 Graff article . 5 Kipnis article . 5 Lakoff article.. 5 MARRIAGE . 5 IS MARRIAGE A FUNDAMENTAL