Final Exam Prep

Question 0

Suppose a closed economy had a public saving of $3 trillion and a private saving of $2 trillion. What is national saving and investing in this country?

Answer 0

$5 trillion, $5 trillion

Question 1

When Ghana sells chocolate to the United States, U.S. net exports

Answer 1

decrease, and U.S. net capital outflow decreases

Question 2

If the reserve ratio is 10%, when the Fed sells $10 million of bonds, bank reserves may

Answer 2

decrease by $10 million causing the money supply to decrease by up to $100 million

Question 3

The long run aggregate supply curve shifts right if

Answer 3

technology improves

Question 4

The classical dichotomy and monetary neutrality state that changes in the money supply

Answer 4

affect nominal variables, but not real variables

Question 5

What would cause prices and real GDP to rise in the short run

Answer 5

an increase in the money supply

Question 6

According to classical macroeconomic theory, changes in the money supply affect

Answer 6

the price level but not real GDP