3. If the U.S. dollar increases in value, what will most likely be the effect on

Question

3. If the U.S. dollar increases in value, what will most likely be the effect on U.S. exports of goods to other countries?

A. Exports would increase.
B. Exports would decrease.
C. Exports would stay the same.
D. None of the above

4. A decrease in the money supply will:
A. raise interest rates, reducing planned investment and GDP
B. raise interest rates, increasing planned investment and lowering GDP
C. reduce interest rates, increasing planned investment and GDP
D. reduce interest rates, reducing planned investment and GDP
E. None of the above

5. If the Fed buys bonds from the public through its open market operations:
A. both the price of bonds and the interest rate received by bond holders will increase
B. both the price of bonds and the interest rate received by bond holders will decrease
C. the price of bonds will decrease and the interest rate received by bond holders will increase
D. the price of bonds will increase and the interest rate received by bond holders will decrease
E. None of the above

6. Refer to the following:

Suppose the interest rate is currently 6% and the Fed determines that investment of $40 is required to reach full employment GDP. To target this outcome, the Fed might:

A. sell bonds to the public
B. lower the discount rat e
C. raise the reserve requiremen

7.       Classical economists argued that unemployment during the Depression could be reduced  by:

            A)    Eliminating labor unions and government policies that kept wages too high.

            B)    Strengthening unions and government regulations protecting unions and workers.

            C)    Increasing real wages so that people are encouraged to work.

            D)    Lowering taxes.

9-1.         In the post-war era, the average business expansion has lasted about 6 months.

            True

9-2.         The four phases of the business cycle are, in order, peak, expansion, trough, and         recession.

            True

9-3.         Cyclical unemployment is caused by fluctuations in economic activity.

            True

9-4.         The unemployment rate is calculated by dividing the number of unemployed people by the labor        force.

            Failed

9-5.         If the economy were producing at its potential output, then the unemployment rate would     equal the          target rate of unemployment.

            True

9-6.         Inflation occurs any time there is an increase in the general price level.

            True

Explanation / Answer

3. B 4. A (not 100% sure on this 1) 5. C 6. B 7. A 9-1. T 9-2. False 9-3 True 9-4 True 9-5 True 9-6 True

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