1. The purchase of an Italian automobile by a consumer living in the United Stats creates:
  1. a supply of Euro dollars and a demand for dollars.
  2. A demand for Euro dollars and a supply of dollars
  3. A supply of Euro dollars and a supply of dollars
  4. A demand for Euro dollars and a demand for dollars

  1. The illustration above shows which of the following
  1. aggregate demand and aggregate supply model
  2. Phillips curve model
  3. Keynesian income expenditure model
  4. international supply and demand model
  1. If the dollar cost of the British pound decreases, United States imports from and exports to the United Kingdom will change in which of the following ways?

Imports Exports

  1. IncreaseDecrease
  2. IncreaseIncrease
  3. IncreaseNo change
  4. DecreaseDecrease
  5. DecreaseIncrease
  1. Which of the following would occur if the international value of the United States dollar decreased?
  1. United States exports would rise.
  2. More gold would flow into the United States.
  3. United States demand for foreign currencies would increase.
  4. The United States trade deficit would increase.
  5. Americans would pay less for foreign goods.
  1. If exchange rates are allowed to fluctuate freely and the United States demand for German Euro increases, which of the following will most likely occur?
  1. Americans will have to pay more for goods made in Germany.
  2. Germans will find that American goods are getting more expensive.
  3. The United States balance-of-payments deficit will increase.
  4. The dollar price of Euros will fall.
  5. The dollar price of German goods will fall.
  1. Which of the following best explains the relationship between economic growth and unemployment?
  1. An increase in economic growth reduces unemployment
  2. An increase in economic growth increases unemployment.
  3. An increase in unemployment increases economic growth.
  4. An increase in unemployment decreases economic growth.
  1. According to the short-run Phillips Curve, there is a trade-off between

A.interest rates and inflation

B.the growth of the money supply and interest rates

(C) unemployment and economic growth

(D)inflation and unemployment

(E) economic growth and interest rates

  1. If the real interest rate in Country X increases relative to the real interest rate in Country, Y and there are no trade barriers between the two countries, then for Country X which of the following will be true of its capital flow, the value of its currency, and its exports?

Capital Flow / 3Currency / 4Exports
(A) Inflow / 5Appreciation / 6Increase
(B) Inflow / 7Appreciation / 8Decrease
(C) Inflow / 9Depreciation / 10Increase
(D) Outflow / 11Depreciation / 12Increase
(E) Outflow / 13Appreciation / 14Decrease
  1. According to the long-run Phillips curve, which of the following is true?

A.Unemployment increases with an increase in inflation.

B.Unemployment decreases with an increase in inflation.

C.Increased automation will lead to lower levels of structural unemployment in the long run.

D.Changes in the composition of the overall demand for labor tend to be deflationary in the long run.

E.The natural rate of unemployment is independent of monetary and fiscal policy changes that affect aggregate demand.

  1. In the country of Agronomia, banks charge 10 percent interest on all loans. If the general price level has been increasing at the rate of 4 percent per year, the real rate of interest in Agronomia is

A.14% B. 10% C. 6%D. 4%E. 2.5%

  1. If the United experiences a deficit on current account then the U.S. must necessarily
  1. experience a capital inflow
  2. experience a capital outflow
  3. experience a recession
  4. experience increases rates of inflation
  1. Suppose that as an American citizen you purchase an explodable Cuban cigar, and you give it to an acquaintance living in France. This transaction would be entered as
  1. credit on the current account
  2. debit on the current account
  3. a credit to your good character
  4. a credit on the capital account