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Economics
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11 Dec 2019

1. If the nominal exchange rate increases, what will happen to the real exchange rate, ceteris paribus? Will it increase, decrease, or remain the same?

2. If a currency appreciates, what do we expect to happen to net exports, ceteris paribus? Explain.

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12 Dec 2019
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Related questions

(4 points) Suppose the current GDP is $800 billion, potential GDP is $900 billion, government spending is $100 billion, and tax revenues are $120 billion. The government multiplier is 4.

a. (2 points) If the government increases spending on defense by $20 billion, ceteris paribus, GDP will [increase | decrease] by $ ___________ billion. Show calculations.

b. (2 points) If, instead of increasing G by $20 billion, the government cuts taxes by $20 billion. Ceteris paribus, will the effect on GDP be greater than, equal to, or less than, that in (a)? Explain why.

1. Which of the following demonstrates the law of demand? 

a. Angela buys less gas for her car at $3.00 per gallon than at $3.50 per gallon.

b. Brenda buys more shirts at $25 each since she got a $1 per hour raise at work.

c. Natasha buys fewer Snickers at $0.85 each since the price of Kit Kats fell to $0.70 each.

d. Darlene sells more shirts since the price of shirts rose.

e. Eleanor buys more bran muffins at $1.50 each than at $2.00 each.

 

2. Assume that Columbia has a comparative advantage in coffee and Mexico has a comparative advantage in peppers. If the two countries specialize and trade according to comparative advantage:

a. Columbia will specialize in coffee production and export coffee.

b. more of each good can be consumed in both countries.

c. individuals in Columbia that produce peppers will be hurt because they will lose jobs.

d. All of the above

e. B and C, only

 

3. Which of the following statements is (are) correct?

(x) Ceteris paribus, the market price of a good will rise if demand increases.

(y) Ceteris paribus, the market price of a good will decrease if supply increases.

(z) Ceteris paribus, the market price of a good must increase if demand increases and supply decreases.

A. (x), (y) and (z)

B. (x) and (y) only

C. (x) and (z) only

D. (y) and (z) only

E. (z) only

 

 

1. if the economy is at equilibrium on AD2, policies that increase AD will

a. increase prices, but not real GDP

b. increase prices and increase real GDP

c. Decrease prices and real GDP

d. have no effect on the price level

2. if the economy is at equilibrium on AD4, the best policy for maintaining full employment would be

a. contractionary policies to decrease AD

b. expansionary policies to increase AD

c. increase governmnet spending

d. do nothing to change AD

3. one of the macroeconomic goals is full employment, which economist equate to an unemployment rate of

a. 0% b. 1% c. 5% d. 100%

4. when foreign nations lower the value of their ecurrency relative to the US exports become ________ expensive and will cause US GDP to _______, ceteris paribus.

a. More, rise

b. Less, rise

c. More, fall

d. Less, fall

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