A common feature(s) of the early years of transition
a. Recession
b. Hyperinflation
c. Creation of democracy
d. Macroeconomic stability
e. A and b
Question 2 - Which of the following does not increase (i.e., shift) the supply curve of real loanable funds?
a. Open market purchases of government securities by the central bank.
b. An increase in the discount rate.
c. A reduction in the reserve ratio by the central bank.
d. A reduction in the preferred asset ratio for currency in circulation (C/D), due to a shift in household preferences.
e. All of the above increase the supply.
Question 3 - Assume that the central bank sells government securities in the open market. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and the nominal value of the domestic currency in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium.
a. The real risk-free interest rate rises and nominal value of the domestic currency falls.
b. The real risk-free interest rate falls and nominal value of the domestic currency falls.
c. The real risk-free interest rate and nominal value of the domestic currency remain the same.
d. The real risk-free interest rate rises and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 4 - The Institutional Possibilities frontier:
a. Is the Samuelson curve
b. The Bergson curve
c. A measure of production possibilities
d. Shows the choice between social losses wealth and income
e. The Lorenz Curve f. Shows choice between order and disorder
Question 5 - Which of the following does not increase (i.e., shift) the supply curve of real loanable funds?
a. Open market sales of government securities by the central bank.
b. A reduction in the discount rate.
c. A reduction in the reserve ratio by the central bank.
d. A reduction in the preferred asset ratio for currency in circulation (C/D), due to a shift in household preferences.
e. All of the above increase the supply.
Question 6 - Assume that the central bank sells government securities in the open market. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and real GDP in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium.
a. The real risk-free interest rate rises and real GDP falls.
b. The real risk-free interest rate falls and real GDP rises.
c. The real risk-free interest rate rises and real GDP remains the same.
d. The real risk-free interest rate and real GDP remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
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