B.right, increase

c.left, decrease

d.left, increase

134.

According to the Classical Dichotomy:

a.nominal variables do not affect real variables.

b.real variables do not affect nominal variables.

c.nominal variables are not adjusted for inflation and real units are adjusted for inflation.

D.nominal variables are expressed in monetary units and real variables are expressed in physical units.

135.

According to the principle of monetary neutrality:

A.changes in the money supply do not affect real variables.

b.real variables do not affect nominal variables.

c.nominal variables are not adjusted for inflation and real units are adjusted for inflation.

d.nominal variables are expressed in monetary units and real variables are expressed in physical units.

136.

The velocity of money is:

a.the speed at which the money multiplier works.

B.the rate at which money changes hands.

c.the speed at which prices rise in the economy.

d.the time it takes for checks to be cleared by the Fed.

137.

If the Fed increased the supply of money, and velocity remains unchanged, according to the quantity equation:

a.P x Y must decrease.

b.Y must decrease.

C.P x Y must increase.

d.Y must increase.

138.

The one-for-one adjustment of the nominal interest rate to the inflation rate is called the ________ effect.

A.Fisher

b.inflation tax

c.shoeleather

d.interest rate

139.

The resources wasted when inflation encourages people to reduce their money holdings is called:

a.menu costs.

B.shoeleather costs.

c.misallocation of resources.

d.relative price variability.

140.

When inflation turns out to be higher than expected, borrowers will be ________ off, and lenders will be ________ off.

A.better, worse

b.better, better

c.worse, worse

d.worse, better

15. Open-Economy Macroeconomics: Basic Concepts

141.

Another name given to Net Exports is:

a.trade value.

b.trade deficit.

C.trade balance.

d.balanced trade.

142.

Net Exports are affected by which of the following?

i. Tastes of consumers.

ii. Prices of goods at home and abroad.

iii. The incomes of consumers at home and abroad.

iv. Government policies toward international trade.

a.only i, ii, and iii

b.only ii, iii, and iv

c.only i, ii, and iv

D.all four

143.

Other things remaining equal, when domestic incomes rise, Net Exports:

A.will decrease.

b.will increase.

c.will remain unaffected.

d.might increase or decrease.

144.

When Net Capital Outflow is positive, it means:

a.imports are bigger than exports.