9. In the insider/outsider model, which of the following would cause inflation to fall?A. A small drop in the money supply.B. A more competitive labor market.C. Stronger labor unions.D. A drop in consumer confidence10. If Biden and Congress reduced the current budget deficit by cutting government spending, this couldconceivably:A. decrease income if interest rates fall too much and private investment is more productive than governmentinvestment.B. increase income if interest rates rise enough and government spending is more productive than privateinvestment.C. increase income if interest rates fall enough and private investment is more productive than governmentspending.D. decrease income if interest rates rise enough and private investment is more productive than governmentinvestment.11. During the 2008 U.S. recession the government opted for expansionary fiscal policy to shift AD closer tothe potential output. An economist with a nuanced functional finance view would conclude that the AD:A. shifts to the right due to higher government spending.B. shifts to the left due to higher government spending.C. does not shift since the higher government spending is offset by higher private consumption.D. does not shift since the higher government spending is offset by lower private consumption.12. In 2001, the Bush Administration increased spending by $100 billion and raised taxes by $70 billion at thesame time. It's likely that:A. interest rates will most likely not increase.B. interest rates will most likely increase.C. business investment is not likely to change.D. business investment is likely to increase due to crowding out.13. Bond holders:A. lose when actual inflation equals expected inflation.B. gain when actual inflation is more than was expected.C. do not lose when the expected inflation built into the nominal interest rate is correct.D. do not lose when the expected inflation built into the nominal interest rate is lower than actual inflation.14. If people hang onto money rather than depositing it, the money multiplier will:A. get larger.B. stay the same.C. get smaller.D. be increased by the Federal Reserve. 15. If the U.S. were to stop trading with other nations, economists would predict that in the long run the U.S.would end up with:A. more jobs.B. lower prices.C. a higher standard of living.D. a lower standard of living.16. The price of American goods have slowed and decreased in part to which of the following:A. Outsourcing.B. Increases in educational scoring.C. law of one priceD. globalization and increased trade.17. If Canadians wanted significantly more French products than usual, the:A. demand curve for the euro would shift right.B. demand curve for the euro would shift left.C. supply curve for the euro would shift right.D. supply curve for the euro would shift left.18. EU product price levels have stayed the same over the last year while inflation in the US has increased. EUexports will :A. increase and EU. imports decrease, causing the demand for Euros to rise and the supply of Euros to fall.B. decrease and EU. imports increase, causing the demand for Euros to fall and the supply of Euros to rise.C. decrease and EU imports decrease, causing the demand for Euross to rise and the supply of Eurosto rise.D. increase and EU. imports decrease, causing the demand for Euros to fall and the supply of Euros to rise.19. The recent increase in the Fed Funds rate at the direction of the Federal Reserve tends to:A. lower U.S. prices, make exports more expensive relative to imports, and lower the value of the dollar.B. lower U.S. prices, make exports cheaper relative to imports, and raise the value of the dollar.C. raise U.S. prices, make exports cheaper relative to imports, and raise the value of the dollar.D. raise U.S. prices, make exports more expensive relative to imports, and lower the value of the dollar.20. Of the four choices below, which causes a shift in the Supply of dollars to the right?A. An expansionary fiscal policy that raised U.S. income and increased U.S. imports.B. An expansionary fiscal policy that raised U.S. income and reduced U.S. imports.C. A contractionary fiscal policy that reduced U.S. income and lowered U.S. imports.D. A contractionary fiscal policy that reduced U.S. income and increased U.S. imports.21. In class I showed how the Euro depreciated 10 percent against the dollar over the last couple years. As aresult, European:A. exports rose, boosting the economy.B. imports rose, boosting the economy.C. exports declined, dragging down the economy.D. imports declined, dragging down the economy.22. China has a current trade surplus and considering only the direct effect on income, if the Chinese Nationalbank used expansionary monetary policy, the policy would tend to:A. decrease the exchange rate and increase the trade surplus.B. increase the exchange rate and increase the trade surplus.C. decrease the exchange rate and decrease the trade surplus.D. increase the exchange rate and decrease the trade surplus.

9. In the insider/outsider model, which of the following would cause inflation to fall? A. A small drop in the money supply. B. A more competitive labor market. C. Stronger labor unions. D. A drop in consumer confidence 10. If Biden and Congress reduced the current budget deficit by cutting government spending, this could conceivably: A. decrease income if interest rates fall too much and private investment is more productive than government investment. B. increase income if interest rates rise enough and government spending is more productive than private investment. C. increase income if interest rates fall enough and private investment is more productive than government spending. D. decrease income if interest rates rise enough and private investment is more productive than government investment. 11. During the 2008 U.S. recession the government opted for expansionary fiscal policy to shift AD closer to the potential output. An economist with a nuanced functional finance view would conclude that the AD: A. shifts to the right due to higher government spending. B. shifts to the left due to higher government spending. C. does not shift since the higher government spending is offset by higher private consumption. D. does not shift since the higher government spending is offset by lower private consumption. 12. In 2001, the Bush Administration increased spending by $100 billion and raised taxes by $70 billion at the same time. It's likely that: A. interest rates will most likely not increase. B. interest rates will most likely increase. C. business investment is not likely to change. D. business investment is likely to increase due to crowding out. 13. Bond holders: A. lose when actual inflation equals expected inflation. B. gain when actual inflation is more than was expected. C. do not lose when the expected inflation built into the nominal interest rate is correct. D. do not lose when the expected inflation built into the nominal interest rate is lower than actual inflation. 14. If people hang onto money rather than depositing it, the money multiplier will: A. get larger. B. stay the same. C. get smaller. D. be increased by the Federal Reserve.