ECON252 FINAL EXAM 04-30-2013 - BLUE (KEY)

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Unformatted text preview: ivate saving, _______ public saving and _______ national savings. A. increase; increase; increase B. increase; decrease; will not change *** C. decrease; increase; will not change D. decrease; decrease; decrease 12. An increase in the government budget deficit, other things the same, A. increases both the supply of loanable funds and the supply of domestic currency in the market for foreign exchange. B. decreases the supply of loanable funds and increases the supply of domestic currency in the market for foreign exchange. C. increases the supply of loanable funds and decreases the supply of domestic currency in the market for foreign exchange. D. decreases both the supply of loanable funds and the supply of domestic currency in the market for foreign exchange. *** 13. Assume that Italian jeans sells for 100 euro in Italy and the same pair of jeans sells for 16,000 yen in Japan. The nominal exchange rate is 80 yen per euro. If you buy the same pair of jeans in Italy and sell it in Japan, what is your profit per pair of jeans? A. 2,000 yen B. 4,000 yen C. 6,000 yen D. 8,000 yen*** E. 16,000 yen 14. (Consider the open market macro model.) Venezuela is experiencing capital flight as a result of the death of Hugo Chavez and the more uncertain economic and political environment. Venezuela is experiencing A. a decrease in demand for loanable funds. B. an increase in supply of dollars in the market for foreign currency exchange. *** C. an increase in demand in the market for foreign currency exchange. D. a decrease in real interest rate. E. [All of the above] 15. Which of the following is true? A. If the overall price level rises but real income and interest rate are unchanged, money demand increases. B. If the interest rate falls but real income and the price level are unchanged, money demand increases. C. If the real income falls but the price level and...
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