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Unformatted text preview: ft. B. frictional unemployment rate will decrease and the long run long run aggregate supply curve will shift to the right. C. cyclical unemployment rate will decrease, and the long run aggregate supply curve will shift to the right. D. natural unemployment rate will increase, and the long run aggregate supply curve will shift to the left. *** 5. In 1984, rice was sold for $1 per pound in West Lafayette. In 2012, the same type of rice is sold for $7 per pound. If the CPI was 112 in 1984 and 170 in 2012. What is the price of 2012 rice in 1984 dollars? A. $10.62 B. $4.61*** C. $0.65 D. $1.51 E. [None of the above] 6. If purchasing power parity holds, then an increase in the money supply in the domestic country will A. appreciate the domestic country’s currency relative to a foreign currency in the long run. B. depreciate the domestic country’s currency relative to a foreign currency in the long run. *** C. depreciate the domestic country’s real exchange rate in the long run. D. appreciate the domestic country’s real exchange rate in the long run. [Use the following information to answer questions 7–8.] In 2001 in Thailand, nominal GDP was $15,000 and real GDP was $12,000. In 2002, nominal GDP was $20,000 and GDP deflator was 150. 7. What was real GDP in 2002? A. $30,000 B. $13,333 *** C. $10,000 D. $15,000 E. $12,667 8. What was the inflation rate from 2001 to 2002? A. 20%*** B. 33% C. 11% D. 31% E. 25% 9. If the price of fiction audiobooks increases, which of the following is true about equilibrium in the market for fiction hardcover books? A. price falls, quantity falls B. price rises, quantity falls C. price falls, quantity rises D. price rises, quantity rises *** 10. If a country is experiencing capital flight, A. the domestic currency depreciates. B. the domestic investment decreases. C. the domestic interest rate increases. D. [All of the above] *** E. [None of the above] 11. A decrease in taxes will _______ pr...
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- Spring '08