Reference no: EM132189887
1.Compared with a closed economy, an increase in the growth rate of the money supply in an open economy increases aggregate demand by a:
A.larger amount in both the short run and the long run.
B.smaller amount in both the short run and the long run.
C.larger amount only in the short run.
D.smaller amount only in the short run.
2.An increase in Americans' demand for vehicles made in Europe:
A.decreases the demand for euros, and so the euro appreciates.
B.increases the demand for dollars, and so the euro depreciates.
C.increases the supply of euros, and so the euro depreciates.
D.increases the demand for euros, and so the euro appreciates.
3.Adding up the _____ and the _____ will net out the balance of payments to zero.
A.trade surplus; capital surplus
B.trade deficit; capital surplus
C.trade surplus; trade deficit
D.trade deficit; capital deficit
4.Foreign direct investment includes:
A.the purchase of U.S. bonds by foreigners.
B.spending on U.S.-produced goods by foreigners.
C.the purchase of U.S. stocks by foreigners.
D.spending on construction of a new plant by foreigners in the United States.
5.A country currently operating in a recession would benefit most from:
A.an expansion in the money supply that leads to a deprecation of the domestic currency.
B.an expansion in the money supply that leads to an appreciation of the domestic currency.
C.a contraction in the money supply that leads to an appreciation of the domestic currency.
D.a contraction in the money supply that leads to a deprecation of the domestic currency.
6.An increase in the growth rate of the money supply in the short run causes a(n) _____ of the domestic currency and a(n) _____ in aggregate demand.
A.depreciation; decrease
B.appreciation; increase
C.appreciation; decrease
D.depreciation; increase
7.An increase in the demand for a country's exports will have what effect on its currency?
A.Its value will increase.
B.Its value will not change.
C.Its value will decrease.
D.Its value will depreciate.