In which market should you begin your analysis if the domestic stock market is attracting more foreign investors? Which curve shifts initially?
a. Foreign exchange market, with a shift in the demand for domestic currency
b. Real loanable funds market, with a shift in the demand for real loanable funds
c. Foreign exchange market, with a shift in the supply of domestic currency
d. Real goods market, with a shift in aggregate supply
e. Real loanable funds market, with a shift in the supply of real loanable funds
Question 2 - The Circular Flow Model:
a. Shows that inflation harms consumers and boosts business profitability.
b. Proves that inflation reduces the purchasing power of consumers and does not affect businesses.
c. Has no application to questions relating to inflation.
d. Suggests that when the actual inflation was expected, it may not harm anyone.
Question 3 - Which procedure seems to be most useful to structure a macroeconomic analysis?
a. (1) Describe the economic setting in the three key markets; (2) Analyze the chain reaction of economic causes and effects; (3) Identify the economic shock.
b. (1) Analyze the chain reaction of economic causes and effects; (2) Identify the economic shock; (3) Describe the economic setting in the three key markets.
c. (1) Identify the economic shock; (2) Analyze the chain reaction of economic causes and effects; (3) Describe the economic setting in the three key markets.
d. (1) Identify the economic shock; (2) Describe the economic setting in the three key markets; (3) Analyze the chain reaction of economic causes and effects.
e. (1) Describe the economic setting in the three key markets; (2) Identify the economic shock; (3) Analyze the chain reaction of economic causes and effects.
Question 4 - Inflation:
a. Never hurts the economy.
b. Only hurts the economy as a whole when it is not expected.
c. Never redistributes income and wealth.
d. Hurts the economy when incentives are affected.
Question 5 - Which procedure seems to be most useful to structure a macroeconomic analysis?
a. (1) Analyze the chain reaction of economic causes and effects; (2) Describe the economic setting in the three key markets; (3) Identify the economic shock.
b. (1) Identify the economic shock; (2) Analyze the chain reaction of economic causes and effects; (3) Describe the economic setting in the three key markets.
c. (1) Identify the economic shock; (2) Describe the economic setting in the three key markets; (3) Analyze the chain reaction of economic causes and effects.
d. (1) Describe the economic setting in the three key markets; (2) Identify the economic shock; (3) Analyze the chain reaction of economic causes and effects.
e. (1) Describe the economic setting in the three key markets; (2) Analyze the chain reaction of economic causes and effects; (3) Identify the economic shock.
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