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Question 19 If the nominal interest rate was 10 percent in 2008 and...

Question 19

If the nominal interest rate was 10 percent in 2008 and inflation was 3 percent, then the real interest rate was?

 3 percent.

 4 percent.

 7 percent.

 10 percent.

 13 percent.


Question 20

With an MPC of .75, the government spending multiplier will be?

 1.

 2.

 4.

 5.

 8.


Question 21

Economists who advocate the Keynesian theory of economics would say that prices and wages are?

 sticky and decreases in AD will decrease employment.

 sticky and decreases in AD will decrease unemployment.

 flexible and decreases in AD will decrease employment.

 flexible and decreases in AD will decrease unemployment.

 flexible and increases in AD will increase unemployment.


Question 22


Refer to the graph above of a country's production possibilities curve. If three video iPods™ are currently being produced, the opportunity cost of producing the fourth video iPod™ would be?

 90 video cell phones.

 50 video cell phones.

 40 video cell phones.

 30 video cell phones.

 20 video cell phones.


Question 25The election of a new president resulted in a significant increase in business confidence regarding the economy. How will this new confidence impact the loanable funds market in the short run?

Demand for Loanable Funds / Real Interest Rate

 Increase / Increase

 Increase / Decrease

 Increase / No Change

 Decrease / Decrease

 Decrease / Increase


Question 27 If nominal interest rate equals 12 percent and inflation is 4 percent, then nominal and real interest rates are respectively?

 12 percent and 8 percent.

 12 percent and 16 percent.

 16 percent and 8 percent.

 16 percent and 12 percent.

 8 percent and 4 percent.


Question 29

A decrease in economic growth would be graphically represented by?

 a decrease in the PPC and AD.

 a decrease in the PPC and LRAS.

 a decrease in the AD and SRAS.

 a decrease in the LRAS and AD.

 a decrease in the LRAS and SRAS.


Question 30?

Economic growth would decrease if?

 consumer spending decreased.

 employee wages increased.

 floods ravaged the manufacturing sector in the north.

 government spending decreases significantly.

 the number of imports increased.

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