1- The relationship between the level of prices andinflation is: A. The higher t
ID: 1252851 • Letter: 1
Question
1- The relationship between the level of prices andinflation is:
A. The higher the price level, the lower the rate ofinflation.
B. The higher the rate of increase in the price level, thehigher the rate of inflation.
C. The higher the rate of increase in the price level, the lowerthe rate of inflation.
D. The higher the price level, the higher the rate ofinflation.
2- Which of the following is included in M2?
A. Commercial paper.
B. Stocks.
C. U.S. Treasury bonds.
D. Savings accounts.
3- The demand for money represents the idea that there is:
A. A positive relationship between the interest rate andthe quantity of money demanded.
B. A negative relationship between the level of aggregateoutput and the quantity of money demanded.
C. A negative relationship between the interest rate and thequantity of money demanded.
D. A negative relationship between the price level and thequantity of money demanded.
4- Different firms change their prices at different times; thisleads to:
A. Menu cost of inflation.
B. Shoe leather cost of inflation.
C. General inconvenience.
D. Relative price distortions.
5- If S-I and NX are exactly equal to zero i-e the value ofimports equals the value of exports then:
A. We have trade surplus.
B. We have trade deficit.
C. We have balanced trade.
D. We have no trade at all.
6- Which of the following causes microeconomicinefficiencies in the allocation of resources?
A. Menu cost of inflation.
B. Shoe leather cost of inflation.
C. General inconvenience.
D. Relative price distortions.
7- The difference between a country's merchandise exports andits merchandise imports is the:
A. Balance of trade.
B. Balance of payments.
C. Capital account.
D. None of the given options.
8- If the U.S. real exchange rate increases, then U.S.------------------ will fall
and U.S. ---------------- will rise.
A. Imports; exports.
B. Income; imports.
C. Exports; income.
D. Exports; imports.
9- If Omar does not have a job and is not currently looking forwork but has looked in the past, he is considered:
A. Not in the labor force.
B. Unemployed and in the labor force.
C. Unemployed.
D. Unemployed and not in the labor force.
10- A government wishing to reduce the level of unemploymentthrough the use of fiscal policy would be most likely to:
A. Boost the money supply by relaxing credit controls.
B. Cut interest rates.
C. Increase the size of the budget deficit.
D. Encourage a depreciation of the exchange rate.
Explanation / Answer
D,D,A,C,A,D,B,A,B,A
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