Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) What are the two transmission channels that turned the US crisis into a global crisis? 1)
A) The exchange rate and consumption channels.
B) The trade and financial channels.
C) The financial and exchange rate channels.
D) The exchange rate and trade channels.
E) The consumption and trade channels.
Answer: B
Explanation: A)
B)
C)
D)
E)
2) What method do macroeconomists use to accurately correct for relative standard of living between
two countries?
2)
A) Interest power parity.
B) Purchasing power parity.
C) Output power parity.
D) Income power parity.
E) Expenditure power parity.
Answer: B
Explanation: A)
B)
C)
D)
E)
3) What is the main argument put forward by economists who are in favour of reducing the US
budget deficit now and quickly?
3)
A) The quick action instills credibility and helps to stabilise the interest rate.
B) The quick action instills credibility and helps to stabilise the bond rate.
C) The quick action instills credibility and helps to stabilise the level of debt.
D) The quick action instills credibility and helps to stabilise the current account.
E) The quick action instills credibility and helps to stabilise the exchange rate.
Answer: C
Explanation: A)
B)
C)
D)
E)
1
4) What is the main reason for the persistently high unemployment in the US and the Euro area since
the crisis?
4)
A) Low consumption growth.
B) Low unemployment benefits.
C) Low output growth.
D) High output growth.
E) High consumption growth.
Answer: C
Explanation: A)
B)
C)
D)
E)
5) What was the Fed's policy response to lower consumption and falling firm investment? 5)
A) Having a press conference.
B) Cutting interest rates all the way down to zero.
C) Raising interest rates to 10%.
D) Staying put with the same interest rates.
E) None of the above.
Answer: B
Explanation: A)
B)
C)
D)
E)
6) What is the US share of world GDP in 2011? 6)
A) 22%. B) 21%. C) 18%. D) 19%. E) 20%.
Answer: D
Explanation: A)
B)
C)
D)
E)
7) In 2011, output per capita in Australia was approximately equal to: 7)
A) $53,500. B) $43,500. C) $73,500. D) $33,500. E) $63,400.
Answer: E
Explanation: A)
B)
C)
D)
E)
2
8) When comparing output per capita between China and the U.S.: 8)
A) The comparison is more accurate in Euro.
B) The comparison is most accurate in U.S. dollars.
C) The comparison is more accurate in Australian dollars.
D) The comparison is more accurate when the PPP method is used.
E) The comparison is most accurate in Chinese yuan.
Answer: D
Explanation: A)
B)
C)
D)
E)
9) Which of the following is an economic cost of having a common currency? 9)
A) Loss of independence in setting an independent fiscal policy.
B) Loss of independence in setting an independent exchange rate policy.
C) Loss of independence in setting an independent monetary policy.
D) All of the above.
E) None of the above.
Answer: C
Explanation: A)
B)
C)
D)
E)
10) Which basic variable do macroeconomists focus on about the health of an economy? 10)
A) Unemployment.
B) Inflation.
C) Output growth.
D) All of the above.
E) None of the above.
Answer: D
Explanation: A)
B)
C)
D)
E)
11) What is the central bank in the US formally known as? 11)
A) The Bureau of Monetary Policy.
B) The Federal Reserve Board.
C) The Federal Bureau of Reserve.
D) The Federal Monetary Board.
E) The Federal Policy Board.
Answer: B
Explanation: A)
B)
C)
D)
E)
3
12) Why has the Chinese economy experienced higher output growth compared to those in Central
Europe and former Soviet republics?
12)
A) Tight political control from one party rule allowed for quick economic transitions.
B) Tight political control from one party rule allowed for widespread corruption.
C) Tight political control from one party rule allowed for better property rights protection.
D) Tight political control from one party rule allowed for market deregulation.
E) Tight political control from one party rule allowed for the sale of farmland.
Answer: C
Explanation: A)
B)
C)
D)
E)
13) What was the US government's policy response to lower consumption and falling firm investment? 13)
A) Cut taxes and decreased spending.
B) Raised taxes and decreased spending.
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) What are the two transmission channels that turned the US crisis into a global crisis? 1)
A) The exchange rate and consumption channels.
B) The trade and financial channels.
C) The financial and exchange rate channels.
D) The exchange rate and trade channels.
E) The consumption and trade channels.
Answer: B
Explanation: A)
B)
C)
D)
E)
2) What method do macroeconomists use to accurately correct for relative standard of living between
two countries?
2)
A) Interest power parity.
B) Purchasing power parity.
C) Output power parity.
D) Income power parity.
E) Expenditure power parity.
Answer: B
Explanation: A)
B)
C)
D)
E)
3) What is the main argument put forward by economists who are in favour of reducing the US
budget deficit now and quickly?
3)
A) The quick action instills credibility and helps to stabilise the interest rate.
B) The quick action instills credibility and helps to stabilise the bond rate.
C) The quick action instills credibility and helps to stabilise the level of debt.
D) The quick action instills credibility and helps to stabilise the current account.
E) The quick action instills credibility and helps to stabilise the exchange rate.
Answer: C
Explanation: A)
B)
C)
D)
E)
1
4) What is the main reason for the persistently high unemployment in the US and the Euro area since
the crisis?
4)
A) Low consumption growth.
B) Low unemployment benefits.
C) Low output growth.
D) High output growth.
E) High consumption growth.
Answer: C
Explanation: A)
B)
C)
D)
E)
5) What was the Fed's policy response to lower consumption and falling firm investment? 5)
A) Having a press conference.
B) Cutting interest rates all the way down to zero.
C) Raising interest rates to 10%.
D) Staying put with the same interest rates.
E) None of the above.
Answer: B
Explanation: A)
B)
C)
D)
E)
6) What is the US share of world GDP in 2011? 6)
A) 22%. B) 21%. C) 18%. D) 19%. E) 20%.
Answer: D
Explanation: A)
B)
C)
D)
E)
7) In 2011, output per capita in Australia was approximately equal to: 7)
A) $53,500. B) $43,500. C) $73,500. D) $33,500. E) $63,400.
Answer: E
Explanation: A)
B)
C)
D)
E)
2
8) When comparing output per capita between China and the U.S.: 8)
A) The comparison is more accurate in Euro.
B) The comparison is most accurate in U.S. dollars.
C) The comparison is more accurate in Australian dollars.
D) The comparison is more accurate when the PPP method is used.
E) The comparison is most accurate in Chinese yuan.
Answer: D
Explanation: A)
B)
C)
D)
E)
9) Which of the following is an economic cost of having a common currency? 9)
A) Loss of independence in setting an independent fiscal policy.
B) Loss of independence in setting an independent exchange rate policy.
C) Loss of independence in setting an independent monetary policy.
D) All of the above.
E) None of the above.
Answer: C
Explanation: A)
B)
C)
D)
E)
10) Which basic variable do macroeconomists focus on about the health of an economy? 10)
A) Unemployment.
B) Inflation.
C) Output growth.
D) All of the above.
E) None of the above.
Answer: D
Explanation: A)
B)
C)
D)
E)
11) What is the central bank in the US formally known as? 11)
A) The Bureau of Monetary Policy.
B) The Federal Reserve Board.
C) The Federal Bureau of Reserve.
D) The Federal Monetary Board.
E) The Federal Policy Board.
Answer: B
Explanation: A)
B)
C)
D)
E)
3
12) Why has the Chinese economy experienced higher output growth compared to those in Central
Europe and former Soviet republics?
12)
A) Tight political control from one party rule allowed for quick economic transitions.
B) Tight political control from one party rule allowed for widespread corruption.
C) Tight political control from one party rule allowed for better property rights protection.
D) Tight political control from one party rule allowed for market deregulation.
E) Tight political control from one party rule allowed for the sale of farmland.
Answer: C
Explanation: A)
B)
C)
D)
E)
13) What was the US government's policy response to lower consumption and falling firm investment? 13)
A) Cut taxes and decreased spending.
B) Raised taxes and decreased spending.