5. Given the nation has a capital account surplus and a federal budget deficit, which of the following is an effect of an increase in interest rates?
a. Lower structural unemployment
b. An increase in the trade deficit
c. Aggregate demand and aggregate supply will intersect in a steeper section of the aggregate supply curve
d. An outward shift in the production possibilities frontier
e. An inward shift of the consumption possibilities frontier
6. Which of the following pairs of actions suggest that fiscal policy and monetary policy are working in the same direction?
a. Taxes are lowered, and the discount rate is raised.
b. Government spending increases, and the Fed sells bonds on the open market.
c. Government spending and taxes increase by the same amount, and the required reserve ratio is increased.
d. Taxes are increased, and the Fed buys bonds on the open market.
e. Government spending and taxes decrease by the same amount, and the Fed sells bonds on the open market.
7. Which of the following is true if cyclical unemployment is high?
a. Velocity is low.
b. Monetary policy has little effect on the price level.
c. The marginal propensity to consume will be particularly high.
d. The country's currency has a low value in foreign exchange markets.
e. The Fed could bring the economy back toward full employment by selling bonds on the open market.
5. Given the nation has a capital account surplus and a federal budget deficit, which of the following is an effect of an increase in interest rates?
a. Lower structural unemployment
b. An increase in the trade deficit
c. Aggregate demand and aggregate supply will intersect in a steeper section of the aggregate supply curve
d. An outward shift in the production possibilities frontier
e. An inward shift of the consumption possibilities frontier
6. Which of the following pairs of actions suggest that fiscal policy and monetary policy are working in the same direction?
a. Taxes are lowered, and the discount rate is raised.
b. Government spending increases, and the Fed sells bonds on the open market.
c. Government spending and taxes increase by the same amount, and the required reserve ratio is increased.
d. Taxes are increased, and the Fed buys bonds on the open market.
e. Government spending and taxes decrease by the same amount, and the Fed sells bonds on the open market.
7. Which of the following is true if cyclical unemployment is high?
a. Velocity is low.
b. Monetary policy has little effect on the price level.
c. The marginal propensity to consume will be particularly high.
d. The country's currency has a low value in foreign exchange markets.
e. The Fed could bring the economy back toward full employment by selling bonds on the open market.
