The depreciation of currency

| November 24, 2016

The depreciation of currency will:

Worsen a country’s comparative advantage.

Have no impact on a country’s comparative advantage.

Balance a trade surplus.

Improve a country’s comparative advantage.

Which of the following types of unemployment is considered to be the most controllable through demand-side macroeconomic policy?

Natural unemployment

Structural unemployment

Frictional unemployment

Cyclical unemployment

The law of demand states that quantity demanded of a good is inversely related to the price of that good. Therefore, as the price of a good goes:

Down, the quantity demanded goes down.

Up, the quantity demanded goes down.

Down, the quantity demanded stays the same.

Up, the quantity demanded also goes up.

If income increases more rapidly than expected, then:

Spending on income-support programs will likely be lower than expected.

Tax revenues will be lower than expected.

The budget is less likely to be in surplus.

Estimates of the target rate of employment are likely to increase.

As a country develops economically, what changes usually take place in the goods it exports?

Exports go from being diversified to being specialized in whatever the country finds to its comparative advantage.

There is little change because comparative advantage does not change.

Services and manufactured goods decline in importance and are replaced by raw materials and agricultural products.

Raw materials and agricultural products decline in importance and are replaced by services and manufactured goods.

Suppose that consumer spending is expected to decrease in the near future. If output is at potential output, which of the following policies is most appropriate according to the AS/AD model?

An increase in government spending

An increase in taxes

No change in taxes or government spending

A reduction in government spending

Which of the following topics is best characterized as a macroeconomic issue?

The decision by Apple to produce fewer Macintosh computers

The effect of a drought on the price of corn

The choice a student makes in selecting college course

The effect of an increase in federal spending on the unemployment rate

Using the expenditure approach, gross domestic product equals:

Gross national product

The sum of consumption, investment, and government purchases

Gross national product minus net exports

The sum of consumption, investment, government purchases, and net exports

When interest rates rise, people are:

More likely to borrow, that is, purchase a financial asset.

Less likely to borrow, that is, purchase a financial asset.

More likely to borrow, that is, sell a financial asset.

Less likely to borrow, that is, sell a financial asset.

Globalization that allows governments to pursue expansionary policies can be dangerous because it can lead to:

Goods price inflation

Goods price deflation

Asset price inflation

A reduction in the debt ceiling

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