13. Which of the following explains why production rises in most years? increase

Question

13. Which of the following explains why production rises in most years? increases in the labor force a. b. increases in the capital stock c. advances in technological knowledge d. All of the above are correct. 14. Which of the following would shift the supply of dollars in the market for foreign currency exchange of the open-economy macroeconomic model to the left? a. The exchange rate rises. b. The exchange rate falls. c. The expected rate of return on U.S. assets rises d. The expected rate of return on U.S. assets falls. 15. If money supply increases by i0%, and real GDP by 5%, assuming stable velocity of money, it would imply an in the price level. 16. Purchasing power parity sometimes does not hold in real world, it is mainly because of two reasons, firstly secondly 17. An increase in the demand for Chinese consumer goods in the rest of the world can lead to (an upward/a downward) pressure in the Chinese exchange rate. 18. Suppose that the United States provides a subsidy on sugar exports. In the open- economy macroeconomic model this quota shifts the demand for U.S. dollars in the market for foreign-currency exchange to the real exchange rate and have effect on net exports. the net direction, would 19. If a county becomes more likely to default on its government bonds, this country's and exchange rate will interest rate will 20?The Aggregate-Supply Curve slopes upward in the short run, because of the theory, the theory, and the theory

Explanation / Answer

Question 13.

Ans. D) All of the above are correct

Question 14.

Ans. C) the expected rate of return on U.S assets rises.

Question 15.

Ans. Increase in Price level.

Question 16. PPP

Ans.(1) Goods of different countries are not perfect substitutes.

(2) Internation arbitrage not possible

Question 17.

Ans. Downward Pressure

Question 19:

Ans. If a country becomes more likely to default on its govt. bonds, this country's interst rate will INCREASE and exchange rate will DEPRICIATE.

Question 20.

Answer: three theories which explains why aggregare supply curve slopes upward in short run: these theories are: 1) The sticky price theory; 2) The sticky wage theory; 3) the misperception theory.

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