Econ 203 Mock Exam

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Concordia University *

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203

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Economics

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Feb 20, 2024

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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOLq… 1/38 Score: 100% 62/62 points Winter 2021 Econ 203 Mock Exam Page 1/62 Page 2/62 1/1 point 1. “US Central Bank Boosts Interest Rates Slightly” - March 15, 2017. How should the Federal Reserve intervene in the money market through open market operations to accomplish the new interest rate: Buy Bonds, Increase M and MS shifts to the right Buy Bonds, Decrease M and MS shifts to the right Sell Bonds, Decrease M and MS shifts to the left Sell bonds, Decrease M and MS shifts to the right Use SPRA in the open market operations.
4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOLq… 2/38 Page 3/62 1/1 point 2. The Feds decreased interest rates nearly to zero during the recession to fight unemployment and encourage economic growth. What are the effects on AE, Unemployment, and Output. AE increases, Unemployment Increases & Output increases AE decreases, Unemployment decreases & Output decreases AE increases, Unemployment Decreases & Output increases AE increases, Unemployment decreases & Output increases AE increases, Unemployment & Output remain the same. 3. The Feds decreased interest rates nearly to zero during the recession to fight unemployment and encourage economic growth. The result of the cut in interest rates made companies: More capable of buying from abroad because the currency is stronger. Less capable of buying from abroad because the currency is weaker. More capable of buying from abroad because exchange rates decreased Less capable of buying from abroad because the exchange rates decreased
4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOLq… 3/38 Page 4/62 Page 5/62 1/1 point Did not affect companies by any means. 1/1 point 4. Officials say they use higher interest rates to cool the economy and fend off inflationary spikes that could hurt growth. Explain how do higher interest rates fend off inflationary gap. Higher interest rates increase public consumption and Investment decreasing AE & AD. Higher interest rates decrease public consumption and Investment decreasing AE & AD. Higher interest results in a weaker currency and thus push the economy from Inflation to recession. Higher interest rates will shift MS curve to the right and increase AE & AD. Officials are wrong. Changing interest will not affect output gaps.
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOLq… 4/38 Page 6/62 1/1 point 5. “Oil may rise to $55 if all producers cooperate”. Assume the Canadian economy is in both short and long-run equilibrium. Describe how short/long-run output is affected following an increase in oil prices. AD increases, Output increases and LAS is unchanged. AD Decreases, Output decreases and LAS shifts to the left AS decreases, Output decrease and LAS is unchanged. AS increase, Output increase and LAS is unchanged LAS decrease while short-run output is unchanged. 6. Higher raw material prices resulted in a lower AS and a recessionary gap. What policy should the government use to return the economy back to equilibrium. A fiscal policy implemented by raising taxes. A Monetary policy implemented by cutting taxes. A fiscal policy implemented by cutting taxes. A Monetary policy implemented by decreasing Money Supply.
4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOLq… 5/38 Page 7/62 Page 8/62 1/1 point Both C and D. 1/1 point 7. If the Government wishes to maximize the magnitude of its Fiscal policy. Which of the following should the government hope for? High MPM and Small MPC Small MPM And High MPC High MPM and High MPC Small MPM and Small MPC The government should hope for a miracle. 8. If the Government wishes to maximize the magnitude of its Fiscal policy. Which of the following should the government hope for? Constant, Lump-sum tax and small MPS
4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOLq… 6/38 Page 9/62 Page 10/62 1/1 point Constant, Lump-sum tax and high MPS Progressive income tax and small MPS Progressive income tax and high MPS The government should use a Monetary policy instead. 1/1 point 9. “Nigeria overnight lending rate drops after cash injection”- March 10, 2017. Using the money market, demonstrate the effects of an increase in monetary base. Money supply increases and Interest rates increases Money supply increases and Interest rates Decreases Money supply decreases and Interest rates increases Money supply decreases and Interest rates decreases Interest stays the same while money supply is increased.
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOLq… 7/38 Page 11/62 1/1 point 10. Given Lower interest rates in the economy. What will happen to JMSB’s bond prices and Net exports? Lower prices and lower NX Higher Prices and lower NX Higher Prices and Higher X & IM Higher prices, Higher X and Lower IM Higher prices but NX is not changed. 11. With upward pressure on ONR, in order to maintain ONR at it’s current level. The government should: Use SRA to increase MS Use SRA to decrease MS Use SPRA to decrease MS Buy Bonds to decrease MS Use SPRA to increase MS
4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOLq… 8/38 Page 12/62 Page 13/62 1/1 point 1/1 point 12. Which of the following is FALSE? A discouraged worker is no longer in the labour force. Unanticipated inflation benefits borrowers. For a given nominal interest rate, the real interest rate is lower when there is a low inflation rate. The marginal tax rate has a negative effect on the multiplier. None of the above 13. Suppose our current nominal wage is $12 per hour, and the current CPI is 110. Our labour unions are currently negotiating with the firms for a new nominal wage for next year. Our unions want us to be able to afford the same goods and services that we typically buy. If we agree to a new nominal wage of $19 per hour, this implies we believe the CPI for next year to be At most 135.
4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOLq… 9/38 Page 14/62 Page 15/62 1/1 point At most 150. At most 175. At most 190. At most 100 1/1 point 14. The higher the MPS, the ____ is the AE curve, and the _____ is the fluctuation in the short run GDP. Flatter; smaller Flatter; larger Steeper; smaller Steeper; large The fluctuation in short run GDP is not related to the size of the MPS 15 An increase in autonomous government expenditure would cause the AE line to while a
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 10/38 Page 16/62 1/1 point 15. An increase in autonomous government expenditure would cause the AE line to __________ while a decrease in the proportional tax rate would cause the AE line to __________. shift upwards, become steeper shift downwards, become flatter shift downwards, become steeper shift upwards, become flatter none of the above 16. Other things remaining the same, if households suddenly decide to save more regardless of the level of income, then the consumption function will ____ and the goods market multiplier will _____. Become steeper because the marginal propensity to consume (MPC) falls; fall. Remain unchanged but the savings function will shift downward; fall. Become flatter because the marginal propensity to save (MPS) rises; remain constant. Make a parallel shift downward as autonomous consumption expenditure falls; rise.
4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 11/38 Page 17/62 Page 18/62 1/1 point Make a parallel shift downward as autonomous consumption expenditure falls; remain constant. 1/1 point 17. The Y=AE model assumes that the prices of goods and services are ____ and that input prices (such as wages) are ____. As a result, it is a ____ model. Fixed; fixed; demand-driven Flexible; fixed; demand-driven Fixed; flexible; demand-driven Flexible; fixed; supply-driven Fixed; fixed; supply-driven 18. In the short run AE model, the AS curve is ______ because the ______ is fixed. Vertical; price level
4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 12/38 Page 19/62 Page 20/62 1/1 point Vertical; technology level Upward-sloping; capital stock Upward-sloping; labour force None of the above 1/1 point 19. If changing money market conditions result in an interest rate lower than equilibrium rate, then: Portfolio managers will sell bonds and reduce the cash in their portfolio. Portfolio managers will sell bonds and increase cash in their portfolio. Portfolio managers will buy bonds and reduce cash in their portfolio. Portfolio managers will buy bonds and increase cash in their portfolio. 20. In the short run AE model, if the central bank decreases interest rates, then net exports will ______, the aggregate ___ will shift ______, and short-run equilibrium output will _______, and potential output is
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 13/38 Page 21/62 1/1 point _______. Increase; demand; right; increase; unchanged Increase; supply; right; increase; unchanged Decrease; demand; left; decrease; decrease Decrease; supply; left; decrease; unchanged Decrease; demand; left; decrease; unchanged 1/1 point 21. Monetary base or “High-powered” money may best be described as: Always being larger than Money Supply. The reserves of the Bank of Canada. Loans issued by commercial banks. Cash held by the public and reserves of the commercial banks. None of the above is correct
4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 14/38 Page 22/62 Page 23/62 1/1 point 22. You are the governor of the Bank of Canada. Suppose you want to decrease the money supply. You should: Decrease the overnight interest rate Buy bonds Enact legislation to increase the reserve ratio of the banks All of the above 23. The demand for money is given as Md = 2500-200i, where Md is the quantity of money demanded (in billions of dollars) and i is the interest rate in percentage points. For example, if i = 2%, leave i = 2. The supply of money is set at $500 billion. Suppose that all demand deposits are held in commercial banks and that all commercial banks have a reserve ratio equal to 40 percent. What is the equilibrium interest rate and what amount of bonds in ($) should BOC sell or buy if it wants the interest rate to be 12%? 10% the equilibrium interest rate, it should sell $160 billion. 10% the equilibrium interest rate, it should buy $160 billion.
4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 15/38 Page 24/62 Page 25/62 1/1 point 10% the equilibrium interest rate, it should sell $400 billion. 10% the equilibrium interest rate, it should buy $400 billion None of the answers is correct. 1/1 point 24. The Central Bank of Canada announced a new Monetary Policy plan in which it is planning to sell $100 billion bonds. Which of the following is (are) CORRECT? The price of bonds will fall. The money supply will rise. The currency of this country will depreciate. The money multiplier will rise. Only A, B and C are correct. 25. When people become concerned about political and economic stability, they often increase their use of cash and reduce their dependence on banks and bank deposits If this were to happen what
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 16/38 Page 26/62 1/1 point use of cash and reduce their dependence on banks and bank deposits. If this were to happen, what are the likely consequences on the banking system? A decrease in the cash reserves of the banks as well as an increase in the public’s cash ratio A decrease in the money multiplier and money supply An increase in the public’s cash ratio and the money supply None of the above 1/1 point 26. Suppose the central bank sells $18 million of bonds on the open market. If the banks hold reserves equal to 2.5% of their deposit liabilities, and the public holds cash equal to 7.5% of their deposit holdings, the change in the money supply will be ____, the change in the public’s cash balances will be _____, and the change in the banks’ reserve balances will be ______ . Increase of $184.5 million, increase of $1 million, increase of $0.28 million Decrease of $193.5 million, decrease of $13.5 million, decrease of $4.5 million Decrease of $193.5 million, increase of $0.45 million, increase of $1.35 million None of the above
4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 17/38 Page 27/62 Page 28/62 1/1 point 27. How does an economy self-adjust to an inflationary gap? The AS curve shifts to the left and there is a movement along the AD curve. The AS curve shifts to the right until the gap is closed. The AD curve shifts to the right until the gap is closed. Potential output will decrease until the gap is closed. None of the answers is correct. 28. There is an economy in short-run equilibrium with an inflationary gap. If this is a persistent inflationary gap, what will happen to wage rates and other factor prices as well as short-run equilibrium real output and the general price level? Decrease in wages and factor prices, decrease in real output, decrease in price level Increase in wages and factor prices, decrease in real output, increase in price level Increase in wages, decrease in factor prices, increase in real output, decrease in price level
4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 18/38 Page 29/62 Page 30/62 1/1 point Increase in wages and factor prices, increase in real output, increase in price level 1/1 point 29. An economy is at equilibrium at a real GDP of 750 but current estimates put potential output at 850. Research suggests that the marginal propensity to consume is 0.75, the net proportional tax rate is 0.20, and the marginal propensity to import is 0.05. What change in government expenditure would eliminate this output gap (round to nearest whole number)? 35 100 45 -35
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 19/38 Page 31/62 1/1 point 30. The Board of Governors of the American Federal Reserve System has decided to increase the required reserve ratio for commercial banks in the U.S.A. This increase in reserve ratio (rr) most likely indicates that: the Board of Governors is trying to reduce inflationary pressures in the economy the Board of Governors is trying to stimulate the economy the Board of Governors is trying to increase the money supply the Board of Governors is trying to reduce the cost of credit 31. Person A deposits $65 with TD bank. TD holds 15% as reserves and lends out the rest to person B who needs a loan. Person B takes this money and pays person C. Person C deposits this $___ with CIBC. If CIBC has the same reserve ratio as TD, it holds ____ as reserves and lends out the remaining money. $65, $55.25 $16.25, $1.24 $55.25, $8.29
4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 20/38 Page 32/62 Page 33/62 1/1 point $15, $72.02 1/1 point 32. Person A deposits $65 with TD bank. TD holds 15% as reserves and lends out the rest to person B who needs a loan. Person B takes this money and pays person C.The money multiplier based on the above information is ____ 6.67 0.01 5 15 33. If Ye=200, Yp=180, T=12.5+0.15Y, G=25 then what is the amount of structural balance? SBB=12.5 SBB=14.5
4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 21/38 Page 34/62 Page 35/62 1/1 point SBB=16.5 SBB=18.5 None of the answer is correct 1/1 point 34. An excess demand for money will cause bond prices to __, interest rates to__ and investment expenditure to ___. Fall; fall; fall Fall; fall; rise Fall; rise; fall Rise; fall; fall Rise; fall; rise 35. You are a wealthy Canadian investor and want to invest $135 in a 1 year bond either in Canada or in Japan Bonds in Canada are currently offering a return of 8% and rates in Japan are 6% The
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 22/38 Page 36/62 1/1 point in Japan. Bonds in Canada are currently offering a return of 8% and rates in Japan are 6%. The nominal exchange rate is currently at CDN$0.45/Yen. What will be the total amount of money you will have at the end of the year if you invest in Canada? $128.22 $145.80 $10.80 $0.035 1/1 point 36. You are a wealthy Canadian investor and want to invest $135 in a 1 year bond either in Canada or in Japan. Bonds in Canada are currently offering a return of 8% and rates in Japan are 6%. The nominal exchange rate is currently at CDN$0.45/Yen. What will be the total amount of money you will have at the end of the year (in Canadian dollars) if you invest in Japan? $145.80 $318 $143.10 $156.88
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 23/38 Page 37/62 Page 38/62 1/1 point 37. You are a wealthy Canadian investor and want to invest $135 in a 1 year bond in Japan. Bonds in Canada are currently offering a return of 8% and rates in Japan are 6%. The nominal exchange rate is currently at CDN$0.45/Yen. What if the exchange rate changes to 0.56 while your money is tied up in the Japanese bond market? What will the total money you get from investing in a Japanese bond now? $178.08 $132.45 $148.0 $245.11 38. Which of the following is true? The target overnight interest rate is always higher than the bank rate, and the lowest sensible or effective target overnight interest rate is equal to zero The elimination of automatic stabilizers would increase the need for other fiscal policies.
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 24/38 Page 39/62 Page 40/62 1/1 point Many economists believe that in the long run, monetary policy only influences price levels and interest rates but not real macroeconomic variables. None of the above 1/1 point 39. Under a fixed exchange rate system in which the Cdn$ is fixed against the US$, if the Bank of Canada (BoC) attempts to cut interest rates relative to U.S. interest rates, the problem it would encounter is Upward pressure on the exchange rate between the Cdn$ and US$ and a depletion of the BoC’s US$ reserves. Upward pressure on the exchange rate between the Cdn$ and US$ and an accumulation of the BoC’s US$ reserves. Downward pressure on the exchange rate between the Cdn$ and US$ and a depletion of the BoC’s US$ reserves. Downward pressure on the exchange rate between the Cdn$ and US$ and an accumulation of the BoC’s US$ reserves.
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 25/38 Page 41/62 1/1 point 40. Suppose that in 2001, the price levels in the United Kingdom and Canada were 100. By 2016, the price level in the United Kingdom has increased to 210, while the price level in Canada has risen to 160. Suppose the nominal exchange rate between the two countries in 2001 was GBP 1 = C$1.4. What is the 2001 real exchange rate, from Canada’s perspective? 1.83. 1.40. 1.97. 2.10. 2.25. 41. Suppose that in 2001, the price levels in the United Kingdom and Canada were 100. By 2016, the price level in the United Kingdom has increased to 210, while the price level in Canada has risen to 160. Suppose the nominal exchange rate between the two countries in 2001 was GBP 1 = C$1.4. What is the new nominal exchange rate in 2016 if the real exchange rate had remained constant at the 2001 level (from Canada’s perspective)? 1.07. 1.35.
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 26/38 Page 42/62 1/1 point 1.73. 1.84. 2.02. 1/1 point 42. Suppose that in 2001, the price levels in the United Kingdom and Canada were 100. By 2016, the price level in the United Kingdom has increased to 210, while the price level in Canada has risen to 160. Suppose the nominal exchange rate between the two countries in 2001 was GBP 1 = C$1.4. If Canada had fixed its nominal exchange rate against the UK pound at the 2001 level, Canada would have experienced a real exchange rate ____ because its real exchange rate would be ____. Appreciation; 0.95 Appreciation; 1.12 Appreciation; 1.30 Depreciation; 1.84 Depreciation; 2.45
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 27/38 Page 43/62 Page 44/62 1/1 point 43. When the currency depreciates, and exchange rates are increasing. The Canadian dollar is ________ and our Canadian exports are becoming _____ over the years. Undervalued; cheaper Undervalued; more expensive Overvalued; cheaper Overvalued; more expensive Correctly valued; neither cheaper nor more expensive 44. Suppose that in 2001, the price levels in the United Kingdom and Canada were 100. By 2016, the price level in the United Kingdom has increased to 210, while the price level in Canada has risen to 160. Suppose the nominal exchange rate between the two countries in 2001 was GBP 1 = C$1.4. The nominal exchange rate in 2016 will be equal to GBP 1 = C$_____ if the Purchasing Power Parity were to hold. 0.465 0.762
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 28/38 Page 45/62 Page 46/62 1/1 point 1.145 1.313 2.175 1/1 point 45. In the long run, more research and development leads to a ____ growth rate of Yp because ____ is affected. Lower; capital accumulation Higher; labour force Higher; Solow’s growth residual Higher, capital accumulation None of the above 46. Suppose a country has a current account surplus of $20 billion, and a capital account deficit of $18 billion As a result the change in official reserves will be which is to say that the central bank
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 29/38 Page 47/62 1/1 point $18 billion. As a result, the change in official reserves will be _____, which is to say that the central bank will be ______ foreign currency. This action will then _______ the country’s monetary base. An increase of $2 billion, buying, increase A decrease of $2 billion, selling, decrease An increase of $2 billion, selling, decrease A decrease of $2 billion, buying, decrease 1/1 point 47. The target inflation rate is 3%. Actual inflation is 5%. There is a recessionary output gap of 5%. Current interest rate is 6%. What will be the new interest rate according to the Taylor rule (i=io+(Y- Yp) + ( π - π *))? 2% 5% 6% 3%
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 30/38 Page 48/62 Page 49/62 1/1 point 48. Savings: S = -85 + 0.3Yd, Investment: I = 135 – 550i, Government spending: G = 465, Exports = 105, Proportional taxes : t = 0.15, Interest rate is i =0.03 (3%), Money demand: Md = 400 – 7000i, Imports = 35 + 0.35Y, Based on the provided information from JMSB’s economy. What is equilibrium output? 978.15 1202.65 788.0 1600.02 49. Savings: S = -85 + 0.3Yd, Investment: I = 135 – 550i, Government spending: G = 465, Exports = 105, Proportional taxes : t = 0.15, Interest rate is i =0.03 (3%), Money demand: Md = 400 – 7000i,
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 31/38 Page 50/62 1/1 point Imports = 35 + 0.35Y, Based on the provided information from JMSB’s economy and Assuming YP= 1000 and Ye= 978.15 What will savings be? 249.11 164.43 90.87 215.07 50. Savings: S = -85 + 0.3Yd, Investment: I = 135 – 550i, Government spending: G = 465, Exports = 105, Proportional taxes : t = 0.15, Interest rate is i =0.03 (3%), Money demand: Md = 400 – 7000i, Imports = 35 + 0.35Y, Based on the provided information from JMSB’s economy and Assuming YP= 1000 and Ye= 978.15. What will the Government Budget Balance be? -318.28
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 32/38 Page 51/62 1/1 point 188.0 -387.85 402.59 51. Savings: S = -85 + 0.3Yd, Investment: I = 135 – 550i, Government spending: G = 465, Exports = 105, Proportional taxes : t = 0.15, Interest rate is i =0.03 (3%), Money demand: Md = 400 – 7000i, Imports = 35 + 0.35Y, Suppose the government finds itself in an inflationary gap and therefore it reduces G from 465 to 415 so as to return to potential output. What is the government budget balance now? 119.02 -309.99 -278.21 0
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 33/38 Page 52/62 Page 53/62 1/1 point 1/1 point 52. The structural budget balance shows what the budget balance would be if ______ is at __________. actual spending, planned spending output, potential output actual tax revenue, forecast tax revenue forecast consumers' expenditure, actual consumers' expenditure 53. In JMSB’s economy Yp (Potential output) is $40 Million higher than Current output which is Y=$100 Million. If taxes are 0.5 and G=50. What is JMSB’s SBB equal to? 70 30 20
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 34/38 Page 54/62 Page 55/62 1/1 point 140 1/1 point 54. Higher Potential Output results in _____ SBB and ____ BB. Higher, the same The same, Higher Higher, Lower Lower, Lower 55. Using a contractionary Fiscal Policy will result in ____ Budget Balance. A higher A lower The same
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 35/38 Page 56/62 Page 57/62 1/1 point It will affect SBB and not BB 1/1 point 56. Suppose that the Japanese yen appreciates against the U.S. dollar. We would expect: Foreign travel by Japanese citizens to the U.S. to decrease. The level of exports from Japan to the U.S. to increase. The level of exports from the U.S. to Japan to increase. Both A and B. 57. The BOC wants the inflation rate to lie in between: 0% and 3%. 1% and 2%. 1% and 3%.
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 36/38 Page 58/62 Page 59/62 1/1 point 4% and 6%. 1/1 point 58. If the BOC uses an SRA Policy, what will be the effect on the money supply? it will decrease the money supply. it will increase the money supply. no change in the money supply. not enough data to give an answer. 59. If the BOC uses an SPRA Policy, what will be the effect on the interest rate? it will decrease the interest rate. it will increase the interest rate. no change in the interest rate.
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 37/38 Page 60/62 Page 61/62 1/1 point not enough data to give an answer. 1/1 point 60. The term demand for money usually refers to the aggregate demand for cash and cheque able deposits in the economy. sum of all desired holdings of cash. sum of all desired assets, including cash, bonds, and real property. cash and deposits actually held by firms. 61. Other things being equal, the transactions demand for money tends to increase when national income falls. national income rises. the price level falls.
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4/29/2021 Winter 2021 Econ 203 Mock Exam Survey https://www.surveymonkey.com/r/quiz/results?sm=tblKF8Mn2f6Bld_2BcZL3hwJsql1HAwmCqIoNQ7N1N286z9BZ3UzFhBuaObTlK98TTLF8Wdme9ZEJq86QBWQmYQLCYcbVKmnKJWc_2Be3LDw5VFAii3LOL… 38/38 Page 62/62 All set! Now create your own interactive quiz. Get started 1/1 point interest rates rise. 1/1 point 62. If a country’s current account is negative, this country is a ____ and its balance of payments is ____. Lender, zero. Borrower, zero. Lender, positive. Borrower, positive. Done
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