to result in: (a) increasing national output. (b) decreasing aggregate demand: (

Question

to result in: (a) increasing national output. (b) decreasing aggregate demand: (C) increasing the interest rate; (d) increasing the inflation rate. 23. The relationship between the growth rate of GDP and the growth rate ot GDP per capita is: (a) they are the same: (b) the growth rate per capita is usually larger:() difference depends of the growth rate of the population: (d) none of the above. the 34. If expectations of the health of the future economy deteriorate substan following will probably occur shortly afterwards: (a) decline in consum tially, the ption; (b) decline in the interest rate; (c) decline in imports: (d) all of the above 35. The Fed's s monetary policy in recent months primarily tried to: (a) increase employment; (b) restrain inflation: (c) increase the value of the dollar: (d) decrease asset prices 36 When the Federal Reserve increases the Federal Funds interest rate:(a) the long term interest rates increase by exactly the same amount: (b) the stock market must rise (c) there is a positive effect on consumption: (d) it may affect expectations 37. Convergence of poorer countries to high per capita income countries is most pronounced where: (a) the growth rate of population is high; (b) countries have the same steady state: (c) the depreciation rate is hight; (d) none of the above. 38 The US has a huge import surplus. This necessarily means that: (a) the US interest rate must be higher than interest rates abroad; (b) the US interest rate must be lower than interest rates abroad ; (c) the US has net capital imports; (d) the US has net capital exports 39 In a flexible exchange rate system (a) capital movements largely depend on interest rate differences between countries; (b) trade depends on expectations: (c) capital movements depend on expectations; (d) none of the above. 40. In the US right now, a decrease in the money supply will (a) decrease the interest rate; (b( decrease national income; (c) increase investment: (d) none of the above.

Explanation / Answer

(23) (c)

GDP per capita = GDP / Population, therefore

Growth rate of GDP per capita = Growth rate of GDP - Growth rate of population

(34) (d)

Lower confidence in economy will decrease consumption demand, decrease investment demand (which lowers interest rate),leading to lower GDP (which lowers import demand).

(35) (b)

(36) (d)

Higher federal funds rate affects expectations on short and long term interest rate.

NOTE: As per Chegg answering policy, first 4 questions are answered.

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