THROUGH 42 RELATE TO ECONOMICS. (18 MINUTES)A BUSINESS CY...

Questions 31 through 42 relate to Economics. (18 minutes)

A business cycle theory developed by applying utility theory and budget constraints to macroeconomic models is most

closely associated with which school of economic thought?

A)

Austrian.

B)

New Classical.

C)

New Keynesian.

Question #32 of 120 Question ID: 1146068

A central bank is said to have credibility if:

it issues inflation reports monthly.

economic actors base decisions on the central bank’s

stated inflation targets.

it determines both the policy rate and the method for

computing the inflation rate.

Question #33 of 120 Question ID: 1146077

Consider the following foreign exchange and interest rate information:

Spot rate: 1.3382 USD/EUR.

One year riskless USD rate = 2.5%.

One year riskless EUR rate = 3.5%.

The one-year arbitrage-free forward exchange rate is closest to:

1.2391 USD/EUR.

1.3253 USD/EUR.

1.3513 USD/EUR.

Question #34 of 120 Question ID: 1146075

Other things equal, a country is most likely to have a current account deficit if it also has:

a low savings rate.

a government budget surplus.

a low rate of domestic investment.

Question #35 of 120 Question ID: 1146056

Which of the following statements about monopolists is most accurate?

Monopolists have imperfect information about the

demand curve for their product.

Without government intervention, monopolists will

always earn economic profits.

A monopolist maximizes total revenue where marginal

revenue equals marginal cost.

Question #36 of 120 Question ID: 1146069

A central bank's ability to achieve its policy goals is most likely to be limited by available resources when which of the

following actual rates is above its target rate?

Interest rate.

Inflation rate.

Exchange rate.

Question #37 of 120 Question ID: 1146065

Which of the following statements regarding the money supply and determination of short-term interest rates is least

accurate?

On balance, growth in real GDP tends to increase the

transactional demand for money.

If the short-term interest rate is greater than the

equilibrium rate, there will be excess supply of real

money balances.

An increase in the real money supply from an initial

equilibrium situation will cause households and

businesses to sell interest- bearing securities.

Question #38 of 120 Question ID: 1146059

What are the most likely effects on aggregate demand in the current period of an increase in expected future incomes and

of an increase in the money supply?

Both increase aggregate demand.

Both decrease aggregate demand.

One increases aggregate demand and one decreases

aggregate demand.

Incorrect production decisions are most likely to occur when the inflation rate is:

lower than expected only.

higher than expected only.

either higher or lower than expected.

Question #40 of 120 Question ID: 1146073

The source of comparative advantage, according to the Heckscher- Ohlin model of international trade, is each country's:

labor productivity.

available natural resources.

relative amounts of labor and capital.

Question #41 of 120 Question ID: 1146057

Under which market structure is the profit maximizing strategy to produce the quantity of output for which the price is

equal to marginal cost?

Monopoly.

Perfect competition.

Monopolistic competition.

Question #42 of 120 Question ID: 1146054

Which of the following statements about elasticity is least accurate?

Both demand and supply are more elastic in the long run

than in the short run.

When demand is inelastic, an increase in price will

cause a decrease in the total expenditure on a good.

When the price of a product increases, consumers will

reduce their consumption by a larger amount in the long

run than in the short run.

Question #43 of 120 Question ID: 1146086