Unformatted text preview: ler net capital outflow. *** D. [All of the above] E. [None of the above] 26. (Consider the open market macro model.) If the US government budget deficit increases, then we would expect the A. US trade deficit to increase and real interest rate to fall. B. US trade deficit to decrease and real exchange rate to appreciate. C. US trade surplus to decrease and domestic investment to increase. D. US trade deficit to increase and domestic investment to decrease. *** 27. Sam is considering buying a piece of land today he expects will be worth $35,000 in five years. What is the maximum amount that he should pay for the land today if the interest rate is 8%? A. $26,154 B. $23,820 *** C. $21,689 D. $24,837 [Use the following table to answer questions 28–29.] These are BLS statistics from March, 2013. Adult Non‐Institutional Population 245.0 million Employed 143.3 million Unemployed 11.7 million 28. What is the unemployment rate? A. 8.2% B. 4.8% C. 7.5% *** D. 6.9% E. [None of the above] 29. What is the labor force participation rate? A. 58.5% B. 63.3% *** C. 61.2% D. 55.8% E. [None of the above] 30. Why can’t the unemployment rate be considered a perfect measure of unemployment? A. The unemployment rate includes discouraged workers. B. The unemployment rate does not distinguish between full‐time and part‐time work. *** C. The BLS does not collect data on race and gender. D. The BLS only samples a tiny fraction of the population. E. [All of the above] 31. If health insurance companies can only charge one price to all their customers, low risk people will tend to not buy insurance. Thus, A. moral hazard will tend to increase health insurance prices. B. moral hazard will tend to decrease health insurance prices. C. adverse selection will tend to increase health insurance prices. *** D. adverse selection will tend to decrease health insurance prices. 32. Banks do not hold excess reserves, and households do not hold currency. If the reserve requirement is 20% and total reserves in the banking system is $165,000, the simple money multiplier is _______ and the total value of demand deposits is _______ . A. 4; $41,250 B. 5; $33,000 C. 4; $660,000 D. 5; $825,000 *** [Use the following table to answer questions 33–34.] Price in Pri...
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- Fall '08
- real exchange rate, open market macro, market macro model.