macroeconomics-multiply-test-bank-google-tai-lieu

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TEST 1
1. Which of the following questions is more likely to be studied by a microeconomist than

a macroeconomist?
A. Why do prices in general rise by more in some countries than in others?
B. How rapidly is GDP currently increasing?
C. Why do wages differ across industries?
D. Why do national production and income increase in some periods and not in others?
2. Which of the following is not a question addressed by macroeconomists?
A. What, if anything, can the government do to promote growth in incomes, low inflation,
and stable employment?
B. Why is average income high in some nations but low in others?
C. Why do production and employment expand in some years and contract in others?
D. What is the impact of foreign competition on VN auto industry?
3. Much of macroeconomics attempts to explain
A. changes in the growth rate of state government spending.

B. changes in the price of oil and gasoline.
C. long-run growth and short-run fluctuations in real GDP.
D. changes in the prices and quantities of individual goods and services.
4. Which of the following statistics is usually regarded as the best single measure of a
society’s economic well being?
A. the inflation rate

B. gross domestic product
C. the unemployment rate
D. the trade deficit
5. For an economy as a whole,
A. wages must equal income.

B. the market value of production must equal expenditure.
C. consumption must equal saving.
D. investment must equal the value of stocks and bonds purchased.
6. Which of the following statements about GDP is correct?
A. GDP measures two things at once: the total income of everyone in the economy and the
total expenditure on the economy’s output of goods and services.
B. Money continuously flows from households to firms and then back to households, and
GDP measures this flow of money.
C. GDP is generally regarded as the best single measure of a society’s economic well-
being.
D. All of the above are correct.
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7. For an economy as a whole, income must equal expenditure because
A. The number of firms is equal to the number of households in an economy.

B. every dollar saved by some consumer is a dollar of spending by some other consumer.
C. individuals can only spend what they earn each period.
D. Every dollar spent by some buyer is a dollar of income for some seller.
8. If an economy’s GDP falls, then it must be the case that the economy’s
A. income and expenditure both fall.

B. income falls and expenditure rises.
C. income and saving both fall.
D. income falls and saving rises.
9. If an economy’s GDP rises, then it must be the case that the economy’s
A. income rises and expenditure falls.

B. income and expenditure both rise.
C. income rises and saving falls.
D. income and saving both rise.
10. In the actual economy, households
A. spend all of their income.

B. divide their income among spending, taxes, and saving.
C. buy all goods and services produced in the economy.
D. Both (a) and (c) are incorrect.
11. According to the circular-flow diagram GDP
A. can be computed as the revenue firms receive from the sales of goods and services but
not as the payments they make to factors of production.
B. cannot be computed as either the revenue firms receive or the payments they make to
factors of production.
C. can be computed as payments firms make to factors of production but not as revenues
they receive from the sales of goods and services.
D. can be computed as either the revenue firms receive from the sales of goods and
services or the payments they make to factors of production.
12. Which of the following is a way to compute GDP?
A. total income earned.

B. total expenditures on final goods.
C. add up the market values of all final goods and services.
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13. Angus the sheep farmer sells wool to Barnaby the knitter for $20. Barnaby makes two
sweaters, each of which has a market price of $40. Collette buys one of them, while the other
remains on the shelf of Barna by’s store to be sold later. What is GDP here?
A. $60
B. $80
C. $100
D. $40
14. The table below contains data for the country of Togogo. The base year is 1974.
Year Nominal GDP

Deflator
GDP
1974 $2000 100
1975 $3000 120
1976 $3750 150
1977 $6000 200
From 1976 to 1977,
Select one:
A. inflation was 33.3% and output grew at a rate of 60%.

B. inflation was 33.3% and output grew at a rate of 20%.
C. inflation was 50% and output grew at a rate of 60%.
D. inflation was 50% and output grew at a rate of 20%.
15. A country produces only ice cream and pie. Quantities and prices of these goods for the
last several years are shown below. The base year is 2008.
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Year Price of Ice Quantity of Ice Price of Pie Quantity of

Cream Cream
Pie
2008 $2.50 40 $5.00 20
2009 $3.00 50 $6.00 25
2010 $4.00 40 $6.00 30
In 2009, this country’s
A. real GDP was $240, and the GDP deflator was 125.
B. real GDP was $250, and the GDP deflator was 120.
C. real GDP was $250, and the GDP deflator was 125.
D. real GDP was $240, and the GDP deflator was 120.
16. If all quantities produced rise by 10 percent and all prices fall by 10 percent, which of the
following occurs?
A. Real GDP rises by 10 percent, while nominal GDP is unchanged.

B. Real GDP is unchanged, while nominal GDP rises by 10 percent.
C. Real GDP is unchanged, while nominal GDP falls by 10 percent.
D. Real GDP rises by 10 percent, while nominal GDP falls by 10 percent.
17. A recession has traditionally been defined as a period during which
A. nominal GDP declines for four consecutive quarters.

B. nominal GDP declines for two consecutive quarters.
C. real GDP declines for four consecutive quarters.
D. real GDP declines for two consecutive quarters.
18. GDP is not a perfect measure of well-being; for example,
A. GDP excludes the value of volunteer work.

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B. GDP does not address the distribution of income.

C. GDP does not address environmental quality.
19. GDP does not reflect
A. the value of leisure.

B. the value of goods and services produced at home.
C. the quality of the environment.
20. Suppose that twenty-five years ago a country had a nominal GDP of $1,000, a GDP
deflator of 200, and a population of 100.
A. It more than doubled.

B. It increased, but it less than doubled.
C. It decreased.
D. It was unchanged.
Link quizlet for revision:
https://quizlet.com/vn/421638480/macro-chapter-24-flash-cards/
https://quizlet.com/327416090/econ-2301-chapter-24-quiz-flash-cards/
TEST 2
1. The consumer price index is used to
A. monitor changes in the cost of living over time.
B. monitor changes in the level of real GDP over time.
C. monitor changes in the stock market.
D. monitor changes in the level of wholesale prices in the economy.
2. The consumer price index is used to

A. turn dollar figures into meaningful measures of purchasing power.
B. convert nominal GDP into real GDP.
C. measure the quantity of goods and services that the economy produces.
D. characterize the types of goods and services that consumers purchase.
3. Economists use the term inflation to describe a situation in which

A. the economy's overall price level is rising.
B. the economy's overall price level is high, but not necessarily rising.
C. some prices are rising faster than others.
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D. the economy's overall output of goods and services is rising faster than the
economy's overall price level.
4. When the overall level of prices in the economy is increasing, economists say that the
economy is experiencing
A. inflation.
B. deflation.
C. economic growth.
D. stagflation.
5. The inflation rate is defined as the:

A. percentage change in the price level from the previous period.
B. price level minus the price level from the previous period.
C. price level in an economy.
D. change in the price level from one period to the next.
6. The inflation rate you are likely to hear on the nightly news is calculated from
A. the unemployment rate.
B. the CPI.
C. the VN-INDEX
D. the GDP deflator.
7. The CPI is more commonly used as a gauge of inflation than the GDP deflator is
because:
A. the CPI is easier to measure.
B. the GDP deflator cannot be used to gauge inflation.
C. the CPI is calculated more often than the GDP deflator is.
D. the CPI better reflects the goods and services bought by consumers.
8. The CPI is a measure of the overall cost of the goods and services bought by:
Select one:
A. a typical consumer, and the CPI is computed and reported by the General
Statistics Office.
B. typical consumers and typical business firms, and the CPI is computed and
reported by the General Statistics Office.
C. a typical consumer, and the CPI is computed and reported by the Ministry of
Industry and Trade.
D. typical consumers and typical business firms, and the CPI is computed and
reported by the Ministry of Industry and Trade.
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9. The CPI is calculated:

A. weekly.
B. monthly.
C. yearly.
D. quarterly.
10. The steps involved in calculating the consumer price index and the inflation rate, in
order, are as follows:
A. Choose a base year, update the basket, find the prices, estimate the basket’s cost,
compute the index, and compute the inflation rate.
B. Choose a base year, fix the basket, find the prices, compute the inflation rate,
compute the basket's cost, and compute the index.
C. Fix the basket, find the prices, compute the basket's cost, choose a base year and
compute the index, and compute the inflation rate.
D. Fix the basket, find the prices, compute the inflation rate, compute the basket’s
cost, and choose a base year and compute the index.
11. When computing the cost of the basket of goods and services purchased by a typical
consumer, which of the following changes from year to year?
A. the quantities of the goods and services purchased
B. the prices of the goods and services
C. the goods and services making up the basket
12. In computing the consumer price index, a base year is chosen. Which of the following
statements about the base year is correct?
A. The base year is always the first year among the years for which computations
are being made.
B. The value of the consumer price index is always 100 in the base year.
C. The base year is always the year in which the cost of the basket was highest
among the years for which computations are being made.
D. It is necessary to designate a base year only in the simplest case of two goods; in
more realistic cases, it is not necessary to designate a base year.
13. If the consumer price index was 96 in 2012, 100 in 2013, and 102 in 2014, then the
base year must be
A. 2012.
B. 2013.
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C. 2014.
D. The base year cannot be determined from the given information.
14. Suppose a basket of goods and services has been selected to calculate the CPI and 2012
has been chosen as the base year. In 2012, the basket’s cost was $80.00; in 2013, the
basket’s cost was $84; and in 2014, the basket’s cost was $87.60. The value of the CPI
was
A. 100 in 2012.
B. 105 in 2013.
C. 109.5 in 2014.
15. The consumer price index measures approximately the same economic phenomenon as:
A. the unemployment rate.
B. nominal GDP.
C. the GDP deflator. measures the overall level of prices in the economy
D. real GDP.
16. Because consumers can sometimes substitute cheaper goods for those that have risen in
price,
A. The GDP deflator understates inflation.
B. The GDP deflator overstates inflation.
C. The CPI overstates inflation.
D. The CPI understates inflation.
17. During a certain year, the consumer price index increased from 120 to 132 and the
purchasing power of a person’s bank account increased by 4 percent. For that year:
A. the nominal interest rate was 14 percent.
B. the nominal interest rate was 6 percent.
C. the inflation rate was 12 percent.
D. the inflation rate was 9 percent.
18. Rosa deposits $100 in a bank account that pays an annual interest rate of 20%. A year
later, after Rosa has accumulated $20 in interest, she withdraws her $120. Rosa’s
purchasing power
A. did not change if the inflation rate was 20 percent.
B. decreased if the inflation rate was -5 percent.
C. increased if the inflation rate was 22 percent.
D. More than one of the above is correct.
19. A worker received $5 for a daily wage in 1930, which has the equivalent value of
$63.24 today. If the CPI was 17 in 1930 what is the value of the CPI today, rounded to
the nearest whole number?
Select one:
A. 1.3
B. 134
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C. 215
D. 17
20. The consumer price index was 200 in 2012 and 208 in 2013. The nominal interest rate
during this period was 9 percent. What was the real interest rate during this period?
A. 1.00 percent
B. 5.15 percent
C. 5.00 percent
D. 13.00 percent
TEST 3
1. Because capital is subject to diminishing returns, higher saving and investment does not
lead to higher
A. income in the short run.

B. growth in the long run.
C. income in the long run.
D. growth in the short run.
2. Last year real GDP in the imaginary nation of Populia was 907.5 billion and the
population was 3.3 million.
The year before real GDP was 750 billion and the population was 3 million. What was the
growth rate of real GDP per person during the year?
A. 10 percent
B. 14 percent
C. 17 percent
D. 21 percent
3. Which of the following is a good gauge of economic progress?
A. the level of real GDP per person and the growth rate of real GDP per person
B. the level of real GDP per person, but not the growth rate of real GDP per person
C. neither the level nor the growth rate of real GDP per person
D. the growth rate of real GDP per person, but not the level of real GDP per person
4. Productivity is the amount of goods and services
A. produced for each hour of a worker’s time. It is not linked to a nation’s

economic policies.
B. an economy produces. It is not linked to a nation’s economic policies.
C. produced for each hour of a worker’s time. It is linked to a nation’s economic
policies.
D. an economy produces. It is linked to a nation’s economic policies.
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5. A nation’s standard of living is determined by
A. the quantity of natural resources with which it is endowed.

B. the productivity of its workers.
C. the percentage of its GDP that is accounted for by government purchases.
D. factors and events that are beyond the nation’s control.
6. A nation's standard of living is best measured by its
A. nominal GDP.
B. nominal GDP per person.
C. real GDP.
D. real GDP per person.
7. Last year real GDP in the imaginary nation of Oceania was 561.0 billion and the
population was 2.2 million. The year before, real GDP was 500.0 billion and the population
was 2.0 million. What was the growth rate of real GDP per person during the year?
A. 2 percent
B. 10 percent
C. 4 percent
D. 12 percent
8. Suppose that real GDP grew more in Country A than in Country B last year.
A. Country A must have a higher standard of living than country B.

B. Country A's productivity must have grown faster than country B's.
C. Both of the above are correct.
D. None of the above are correct.
9. Which of the following items plays a role in determining productivity?
A. physical capital
B. natural resources
C. technological knowledge
10. Which of the following pairs of terms refer to the same thing?
A. “capital” and “physical capital”

B. “standard of living” and “human capital”
C. “standard of living” and “productivity”
D. “technological knowledge” and “human capital”
11.An understanding of the best ways to produce goods and services is called
A. productivity.
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B. technology.
C. human capital.
D. physical capital.
12. Industrial machinery is an example of
A. a factor of production that in the past was an output from the production process.
B. physical capital.
C. something that influences productivity.
13. Which of the following is not an example of physical capital?
A. a factory building
B. the office chair in a lawyer’s office
C. the knowledge of workers
D. a delivery van
14. Which of the following is an example of physical capital?
A. the computer a secretary uses

B. rivers on which goods are transported
C. the skills and knowledge of a doctor
15. Human capital is the
A. total number of hours worked in an economy.

B. knowledge and skills that workers acquire through education, training, and
experience.
C. stock of equipment and structures that is used to produce goods and services.
D. same thing as technological knowledge.
16. Which of the following is an example of human capital?
A. the things you have learned this semester

B. any capital goods that require a human to be present to operate
C. the comfortable chair in your dorm room where you read economics texts
D. the amount you get paid each week to work at the library
17. Which of the following is considered human capital? Knowledge acquired from
A. early childhood education programs

B. job training
C. on-the-job experience
18. Which of the following are human capital and physical capital, respectively?
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A. for a grocery store: grocery carts and shelving

B. for a school: chalkboard and desks
C. for a library: the building and the reference librarians’ knowledge of the Internet
D. for an accounting firm: the accountants’ knowledge of tax laws and computer
software
19. Natural resources
A. are inputs provided by nature.

B. include land, rivers, and mineral deposits.
C. take two forms: renewable and nonrenewable.
20. Accumulating capital
A. allows society to consume more in the present.

B. decreases saving rates.
C. requires that society sacrifice consumption goods in the present.
D. involves no trade-offs.
21. Which of the following is a determinant of productivity?

A. human capital per worker
B. physical capital per worker
C. natural resources per worker
22. Which of the following would increase productivity?
A. an increase in the physical capital stock per worker
B. an increase in human capital per worker
C. an increase in natural resources per worker
23. If there are diminishing returns to capital, then
A. increases in the capital stock eventually decrease output.
B. increases in the capital stock increase output by ever smaller amounts.
C. capital produces fewer goods as it ages.
D. old ideas are not as useful as new ones.
24. “When workers have a relatively small quantity of capital to use in producing goods and
services, giving them an additional unit of capital increases their productivity by a relatively
large amount.” This statement
A. is an assertion that production functions have the property of constant returns to scale.
B. is consistent with the view that capital is subject to diminishing returns.
C. is inconsistent with the view that it is easier for a country to grow fast if it starts out
relatively poor.
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25. Some poor countries appear to be falling behind rather than catching up with rich countries.
Which of the following could explain the failure of a poor country to catch up?
A. The poor country has outward-oriented trade policies.
B. The poor country allows foreign direct investment.
C. The poor country has poorly developed property rights.
TEST 4
1. Nina wants to buy and operate an ice-cream truck but doesn’t have the financial
resources to start the business. She borrows $5,000 from her friend Max, to whom she
promises an interest rate of 7 percent, and gets another $10,000 from her friend David, to
whom she promises a third of her profits. What best describes this situation?
A. David is a stockholder, and Max is a bondholder.
B. David is a stockholder, and Nina is a bondholder.
C. Max is a stockholder, and Nina is a bondholder.
D. Max is a stockholder, and David is a bondholder.
2. If the government collects more in tax revenue than it spends, and households consume
more than they get in after-tax income, then
A. private saving is positive, but public saving is negative.
B. private and public saving are both negative.
C. private and public saving are both positive.
D. private saving is negative, but public saving is positive.
3. A closed economy has income of $1,000, government spending of $200, taxes of $150,
and investment of $250. What is private saving?
A. $400
B. $200
C. $300
D. $100
4. The primary economic function of the financial system is to
A. provide expert advice to savers and investors.
B. match one person’s consumption expenditures with another person’s capital
expenditures.
C. match one person’s saving with another person’s investment.
D. keep interest rates low.
5. The fact that borrowers sometimes default on their loans by declaring bankruptcy is
directly related to the characteristic of a bond called
A. credit risk.
B. interest risk.
C. term risk.
D. private risk
.
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6. Which of the following statements is correct?

A. All bonds are, by definition, perpetuities.
B. When a corporation sells stock as a means of raising funds it is engaging in debt
finance.
C. The owners of bonds sold by the Microsoft Corporation are part owners of that
corporation.
D. The expected future profitability of a corporation influences the demand for that
corporation’s stock.
7. We associate the term debt finance with

A. the bond market, and we associate the term equity finance with the stock
market.
B. financial markets, and we associate the term equity finance with financial
intermediaries.
C. financial intermediaries, and we associate the term equity finance with financial
markets.
D. the stock market, and we associate the term equity finance with the bond market.
8. Two bonds have the same term to maturity. The first was issued by a central
government and the probability of default is believed to be low. The other was issued
by a corporation and the probability of default is believed to be high. Which of the
following is correct?
A. Because of the differences in tax treatment and credit risk, the corporate bond
should have
B. the higher interest rate.
C. It is not possible to say if one bond has a higher interest rate than the other.
D. Because of the differences in tax treatment and credit risk, the state bond should
have the higher interest rate.
9. Because they have the same term to maturity the interest rates should be the same. The
sale of bonds
A. to raise money is called equity finance, while the sale of stocks to raise funds is
called debt finance.
B. and stocks to raise money is called debt finance.
C. to raise money is called debt finance, while the sale of stocks to raise funds is
called equity finance.
D. and stocks to raise money is called equity finance.
10. In early 2020 Vietnam is suffering from the Corona virus threat. What effect would we
expect this to have on the stock of companies?
A. raise the demand for existing shares of the stock, causing the price to rise
B. decrease the demand for existing shares of the stock, causing the price to fall
C. raise the supply of the existing shares of stock, causing the price to rise
D. raise the supply of the existing shares of stock, causing the price to fall
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11. Which of the following statements is correct?

A. Expectations about the business cycle have no impact on stock prices.
B. A general, persistent decline in stock prices may signal that the economy is about
to enter a boom period because people will be able to buy stock for less money.
C. A general, persistent decline in stock prices may signal that the economy is about
to enter a recession because low stock prices may mean that people are expecting
low corporate profits.
D. A general, persistent decline in stock prices may signal that the economy is about
to enter a recession because low stock prices mean that corporations have had
low profits in the past.
12. Stocks and bonds

A. and checking accounts are all stores of value, but only stocks and bonds
commonly function as mediums of exchange.
B. and checking accounts all commonly function as mediums of exchange, but only
stocks and bonds are a store of value.
C. and checking accounts are all stores of value and commonly function as
mediums of exchange.
D. and checking accounts are all stores of value, but only checking accounts
commonly function as mediums of exchange.
13. It is claimed that mutual funds have two advantages. The first is that mutual funds allow
people with small amounts of money to diversify. The second is that mutual funds
provide the skills of professional money managers who buy stocks they believe will be
the most profitable and thereby increase the return that mutual fund depositors earn on
their savings.
A. Economists are skeptical of the first claim, but strongly agree with the second.
B. Economists strongly agree with both claims.
C. Economists strongly agree with the first claim, but are skeptical of the second.
D. Economists are skeptical of both claims.
14. The old adage, “Don’t put all your eggs in one basket,” is very similar to a modern bit
of advice concerning financial matters:
A. “Use a medium of exchange.”
B. “Intermediate.”
C. “Diversify.”
D. “Buy low risk bonds.”
15. Which of the following is a certificate of indebtedness?

A. stocks but not bonds
B. both stocks and bonds
C. neither stocks nor bonds
D. bonds but not stocks
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16. A creditor of a corporation holds

A. stocks sold by the corporation. If the corporation experiences financial
difficulties, bondholders are paid before stockholders.
B. bonds sold by the corporation. If the corporation experiences financial
difficulties, bondholders are paid before stockholders.
C. bonds sold by the corporation. If the corporation experiences financial
difficulties, stockholders are paid before bondholders.
D. stocks sold by the corporation. If the corporation experiences financial
difficulties, stockholders are paid before bond holders.
17. You observe a closed economy that has a government deficit and positive investment.
Which of the following is correct?
A. Private saving is positive; public saving is negative.
B. Private and public saving are both positive.
C. Private saving is negative; public saving is positive.
D. Both private saving and public saving are negative.
18. In which of the following cases would it necessarily be true that national saving and
private saving are equal for a closed economy?
A. The government’s tax revenue is equal to its expenditures.
B. After paying their taxes and paying for their consumption, households have
nothing left.
C. Public saving is equal to investment.
D. Private saving is equal to government expenditures.
19. For a closed economy, GDP is $12 trillion, consumption is $7 trillion, taxes net of
transfers are $3 trillion and the government runs a deficit of $1 trillion. What are private
saving and national saving?
A. $2 trillion and $1 trillion, respectively
B. $2 trillion and $3 trillion, respectively
C. $5 trillion and $3 trillion, respectively
D. $5 trillion and $1 trillion, respectively
20. In a closed economy, if Y remained the same, but G rose, T rose by the same amount as
G, and C fell but by less than the increase in T, what would happen to private and
national saving?
A. national saving would fall and private saving would rise
B. national saving would rise and private saving would fall
C. both national saving and private saving would fall
D. None of the above is correct.
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TEST 5
1. The benefit of diversification when constructing a portfolio is that it can eliminate
A. speculative bubbles.
B. risk aversion.
C. market risk.
D. firm-specific risk.
2. Most financial decisions involve two related elements:

A. time and risk.
B. saving and consumption.
C. advice and consent.
D. investment and taxes.
3. Which of the following statements best describes the economist’s view of finance and
the financial system?
A. The financial system, while interesting, is not very important to the functioning
of the economy; however, the tools of finance are often helpful to us as individuals when we
find ourselves making certain decisions.
B. The financial system is very important to the functioning of the economy, and
the tools of finance are often helpful to us as individuals when we find ourselves making
certain decisions.
C. The financial system is very important to the functioning of the economy;
however, the tools of finance are not particularly helpful to us as individuals since we seldom
make decisions for which those tools are useful.
D. The field of finance is intimately concerned with the financial system and the
tools of finance, and financial economists see great importance in them; however, the
“mainstream” economist sees little value in studying financial markets or the tools of finance.
4. Compounding refers directly to

A. changes in the interest rate over time on a bank account or a similar savings
vehicle.
B. interest being earned on previously-earned interest.
C. finding the present value of a future sum of money.
D. finding the future value of a present sum of money.
5. Discounting refers directly to
A. decreases in interest rates over time, while compounding refers to increases in
interest rates over time.
B. calculations that ignore the phenomenon of compounding for the sake of ease
and simplicity.
C. finding the future value of a present sum of money.
D. finding the present value of a future sum of money.
6. One way to characterize the difference between compounding and discounting is to say
that
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A. compounding involves the assumption that the interest rate is zero, whereas
discounting does not involve that assumption.
B. the process of compounding produces a present value, whereas the process of
discounting produces a future value.
C. the process of compounding produces a future value, whereas the process of
discounting produces a present value.
D. discounting involves the assumption that the interest rate is zero, whereas
compounding does not involve that assumption.
7. Other things the same, when the interest rate rises, the present value of future revenues
from investment projects
A. rises, so investment spending rises.
B. falls, so investment spending rises.
C. rises, so investment spending falls.
D. falls, so investment spending falls.
8. The concept of present value helps explain why

A. None of the above are correct; the concept of present value is of no help in
explaining why either investment or the quantity of loanable funds demanded decreases when
the interest rate increases.
B. the quantity of loanable funds demanded decreases when the interest rate
increases, but it is of no help in explaining why investment decreases when the interest rate
increases.
C. investment decreases when the interest rate increases, but it is of no help in
explaining why the quantity of loanable funds demanded decreases when the interest rate
increases.
D. investment decreases when the interest rate increases, and it also helps explain
why the quantity of loanable funds demanded decreases when the interest rate increases.
9. There are many concerns for risk-averse lenders. Consider the following: 1. Lenders are
concerned that borrowers with the greatest risk are the ones most likely to actively
pursue loans. 2. Lenders are concerned that real GDP will decline leading to reduced
corporate profits. 3. Lenders are concerned that products produced by certain
corporations will become obsolete.
A. 1 is market risk; 2 is firm-specific risk
B. 3 is market risk; 1 is firm-specific risk
C. 2 is market risk; 3 is firm-specific risk
D. 2 is firm-specific risk; 3 is market risk
10. Other things the same, an increase in the interest rate makes the quantity of loanable
funds supplied
A. rise, and investment spending rise.
B. rise, and investment spending fall.
C. fall, and investment spending fall.
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D. fall, and investment spending rise.
11. If the efficient markets hypothesis is correct, then

A. the number of shares of stock offered for sale exceeds the number of shares of
stock that people want to buy.
B. the stock market is informationally efficient.
C. stock prices never follow a random walk.
12. Which of the following is correct?

A. Diversification cannot reduce firm-specific risk.
B. The larger the percentage of stock in a portfolio, the greater the risk, but the
greater the average return.
C. Risk-averse people will not hold stock.
D. Stock prices are determined by fundamental analysis rather than by supply and
demand.
13. The efficient markets hypothesis says that

A. only individual investors can make money in the stock market.
B. it should be easy to find stocks whose price differs from their fundamental value.
C. stock prices follow a random walk.
14. According to the efficient market hypothesis, which of the following statements is not
correct?
A. Stock market prices tend to rise today if they rose yesterday.
B. As judged by the typical person in the market, all stocks are fairly valued all the
time.
C. At the market price, the number of shares being offered for sale matches the
number of shares people want to buy.
D. All of the above statements are incorrect.
15. Stock market fluctuations

A. have few, if any, macroeconomic implications.
B. often go hand in hand with fluctuations in the economy more broadly.
C. rarely have anything to do with fluctuations in the economy more broadly.
D. are attributable to the widespread belief that the efficient markets hypothesis is
correct.
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TEST 7
1. The money supply includes all of the following, EXCEPT

A. metal coins.
B. bank balances accessible with debit cards.
C. lines of credit accessible with credit cards.
D. polymer currency.
2. If the reserve ratio is ¼ and the central bank increases the quantity of reserves in the
banking system by $120, the money supply increases by
A. $160.
B. $90.
C. $150.
D. $480.
3. A bank has capital of $200 and a leverage ratio of 5. If the value of the bank’s
assets decline by 10 percent, then its capital will be reduced to
A. $100
B. $180.
C. $185.
D. $150.
4. Economists use the term “money” to refer to

A. all financial assets, but not real assets.
B. all wealth.
C. those types of wealth that are regularly accepted by sellers in exchange for
goods and services.
D. all assets, including real assets and financial assets.
5. Which of the following is a store of value?

A. currency
B. Vietnam government bonds
C. fine art
6. Most financial assets other than money function as

A. a store of value, but not a unit of account nor a medium of exchange
B. a store of value and a unit of account, but not a medium of exchange.
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C. a medium of exchange and a store of value, but not a unit of account.

D. a medium of exchange, a unit of account, and a store of value.
7. Which list ranks assets from most to least liquid?

A. money, bonds, cars, houses
B. bonds, money, cars, houses
C. bonds, cars, money, houses
D. money, cars, houses, bonds
8. Money is
A. neither the most liquid asset and nor a perfect store of value.
B. the most liquid asset and a perfect store of value.
C. not the most liquid asset but a perfect store of value.
D. the most liquid asset but an imperfect store of value.
9. The set of items that serve as media of exchange clearly includes

A. demand deposits.
B. All of the above are correct.
C. other checkable deposits.
D. balances that lie behind debit cards.
10. Which of the following is not included in M1?

A. a 50,000 VND bill in your wallet
B. 10,000,000 VND in your checking account
C. 50,000,000 VND in your savings account
D. All of the above are included in M1.
11. A central bank’s setting (or altering) of the money supply is known as
A. interest rate policy.
B. open-market operation.
C. employment policy.
D. monetary policy.
12. The State Bank of Vietnam

A. is not responsible for conducting the nation’s monetary policy, and it plays no
role in regulating banks.
B. is not responsible for conducting the nation’s monetary policy, and it plays a
role in regulating banks.
C. is responsible for conducting the nation’s monetary policy, and it plays a role
in regulating banks.
D. is responsible for conducting the nation’s monetary policy, but it plays no role in
regulating banks.
13. Which of the following does the State Bank of Vietnam not do?
A. It acts as a lender of last resort to banks.
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B. It tries to ensure the health of the banking system.

C. It makes loans to any qualified business that requests one.
D. It controls the supply of money.
14. If the State Bank of Vietnam decides to increase the money supply, then the State Bank
of Vietnam
A. sells various types of stocks and bonds from its portfolio to the public.
B. sells government bonds from its portfolio to the public.
C. creates VND and uses them to purchase various types of stocks and bonds from
the public.
D. creates VND and uses them to purchase government bonds from the public.
15. When the State Bank of Vietnam sells assets from its portfolio to the public with the
intent of changing the money supply,
A. those assets are items that are included in M2 and the SBV’s reason for selling
them is to increase the money supply.
B. those assets are items that are included in M2 and the SBV’s reason for selling
them is to decrease the money supply.
C. those assets are government bonds and the SBV’s reason for selling them is to
increase the money supply.
D. those assets are government bonds and the SBV’s reason for selling them is to
decrease the money supply.
16. Over one time horizon or another, a central bank’s policy decisions influence
A. inflation and employment.
B. employment but not inflation.
C. inflation but not employment.
D. neither inflation nor employment.
17. Suppose the banking system currently has $400 billion in reserves, the reserve
requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of
deposits?
A. $5,062.5 billion
B. $5,000 billion
C. $4,937.5 billion
D. $4,995 billion
18. The manager of the bank where you work tells you that your bank has 6 billion VND in
excess reserves. She also tells you that the bank has 400 billion in deposits and 362
billion in loans. Given this information you find that the reserve requirement must be
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A. 32/400.
B. 38/400.
C. 44/400.
D. 6/362.
19. Suppose the banking system currently has $300 billion in reserves, the reserve
requirement is 5 percent, and excess reserves are $30 billion. What is the level of loans?
A. $270 billion
B. $6,000 billion
C. $5,100 billion
D. $5,400 billion
20. If the State Bank of Vietnam raised the reserve requirement, then the money multiplier
A. would increase.
B. would not change.
C. would decrease.
D. could do any of the above.
21. If you deposit 10,000,000 VND of currency into a demand deposit at a bank, this action
by itself
A. increases the money supply.
B. does not change the money supply.
C. decreases the money supply.
D. has an indeterminate effect on the money supply.
22. The leverage ratio is calculated as

A. assets divided by bank capital
B. the reciprocal of the required reserve ratio
C. assets minus liabilities.
D. the required reserve ratio multiplied by bank capital.
23. When the Fed decreases the discount rate, banks will
A. borrow less from the Fed and lend less to the public. The money supply
decreases.
B. borrow more from the Fed and lend more to the public. The money supply
increases.
C. borrow more from the Fed and lend less to the public. The money supply
decreases.
D. borrow less from the Fed and lend more to the public. The money supply
increases.
24. Other things the same, if reserve requirements are increased, the reserve ratio
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A. decreases, the money multiplier increases, and the money supply increases.
B. increases, the money multiplier decreases, and the money supply decreases.
C. decreases, the money multiplier decreases, and the money supply increases.
D. increases, the money multiplier increases, and the money supply increases.
25. Tan and Huong decide to go on a vacation in their homeland, Vietnam. They withdraw
5,000 AUD from their savings account to purchase 5,000 AUD worth of traveler’s
checks. As a result of these changes,
A. M1 and M2 stay the same.
B. M1 increases by 5,000 AUD and M2 decreases by 5,000 AUD.
C. M1 decreases by 5,000 AUD and M2 increases by 5,000 AUD.
D. M1 increases by 5,000 AUD and M2 stays the same.
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TEST 8
1. If nominal GDP is $400, real GDP is $200, and the money supply is $100, then
A. the price level is 2, and velocity is 2.
B. the price level is ½, and velocity is 2.
C. the price level is ½, and velocity is 4.
D. the price level is 2, and velocity is 4.
2. Hyperinflations occur when the government runs a large budget .............., which the
central bank finances with a substantial monetary ................
A. surplus, contraction
B. deficit, expansion
C. deficit, contraction
D. surplus, expansion
3. If an economy always has inflation of 10 percent per year, which of the following costs
of inflation will it NOT suffer?
A. arbitrary redistributions between debtors and creditors
B. menu costs from more frequent price adjustment
C. distortions from the taxation of nominal capital gains
D. shoeleather costs from reduced holdings of money
4. In which of the following cases was the inflation rate 12 percent over the last year?
A. One year ago the price index had a value of 145 and now it has a value of 163.
B. One year ago the price index had a value of 110 and now it has a value of 120.
C. One year ago the price index had a value of 120 and now it has a value of
132.
D. One year ago the price index had a value of 134 and now it has a value of 150.
5. Deflation
A. decreases incomes and enhances the ability of debtors to pay off their debts.
B. increases incomes and enhances the ability of debtors to pay off their debts.
C. increases incomes and reduces the ability of debtors to pay off their debts.
D. decreases incomes and reduces the ability of debtors to pay off their debts.
6. The classical theory of inflation

A. is also known as the quantity theory of money.
B. was developed by some of the earliest economic thinkers.
C. is used by most modern economists to explain the long-run determinants of the
inflation rate.
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7. If the CPI rises, the number of dollars needed to buy a representative basket of goods
A. decreases, and so the value of money rises.
B. increases, and so the value of money falls.
C. increases, and so the value of money rises.
D. decreases, and so the value of money falls
8. When inflation rises people will

A. demand more money so the price level falls.
B. demand less money so the price level falls.
C. demand more money so the price level rises.
D. demand less money so the price level rises.
9. If P denotes the price of goods and services measured in terms of money, then
A. 1/P represents the value of money measured in terms of goods and services.
B. P can be regarded as the “overall price level.”
C. an increase in the value of money is associated with a decrease in P.
10. The supply of money increases when

A. the interest rate increases.
B. the State Bank of Vietnam makes open-market purchases.
C. money demand increases.
D. the price level falls.
11. Money demand depends on

A. neither the price level nor the interest rate.
B. the interest rate but not the price level.
C. the price level and the interest rate.
D. the price level but not the interest rate.
12. A decrease in the money supply creates an excess

A. demand for money that is eliminated by rising prices
B. supply of money that is eliminated by falling prices.
C. demand for money that is eliminated by falling prices.
D. supply of money that is eliminated by rising prices.
13. If the State Bank of Vietnam increases the money supply, then 1/P
A. rises, so the value of money rises.
B. rises, so the value of money falls.
C. falls, so the value of money falls.
D. falls, so the value of money rises.
14. The value of money falls. This might be because the State Bank of Vietnam
A. sold government bonds, which increased the money supply.
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B. bought government bonds, which decreased the money supply.

C. sold government bonds, which decreased the money supply.
D. bought government bonds, which increased the money supply.
15. An associate professor of economics gets a 5,000,000 VND a month raise. He figures
that with his new monthly salary he can buy more goods and services than he could buy
last year.
A. His real salary has fallen and her nominal salary has risen.
B. His real and nominal salary have fallen.
C. His real and nominal salary have risen.
D. His real salary has risen and her nominal salary has fallen.
16. Your KPMG boss gives you an increase in the number of dollars you earn per hour.
This increase in pay makes
A. your nominal wage increase. If your nominal wage rose by a greater percentage
than the price level, then your real wage decreased.
B. your real wage decrease. If your real wage rose by a greater percentage than the
price level, then your nominal wage decreased.
C. your real wage increase. If your real wage rose by a greater percentage than the
price level, then your nominal wage also increased.
D. your nominal wage increase. If your nominal wage rose by a greater
percentage than the price level, then your real wage also increased.
17. Last year, Lan spent all of her income to purchase 200 breads at 20,000 VND per
bread. This year, she spent all of her income to purchase 180 breads at 25,000 VND per
bread.
A. Lan’s nominal income and real income increased this year.
B. Lan’s nominal income decreased this year, but her real income increased.
C. Lan’s nominal income increased this year, but her real income decreased.
D. Lan’s nominal income and real income decreased this year.
18. Last year, you earned a nominal wage of $10 per hour and the price level was 120. This
year your nominal wage is $11 per hour, but you are unable to purchase the same
amount of goods as last year. The price level this year must be
A. 132
B. 135
C. 121
D. 125
19. Your mother complains that her 6% raise this year will not keep up with the increase in
prices. In other words, she is unable to buy the same basket of goods with her 6% raise.
Therefore, she believes that her
A. nominal income increased, but her real income decreased.
B. nominal income and real income decreased.
C. nominal income decreased, but her real income increased.
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D. nominal income and real income increased.
20. The principle of monetary neutrality implies that an increase in the money supply will
A. increase neither the price level nor real GDP.
B. increase the price level, but not real GDP.
C. increase real GDP and the price level.
D. increase real GDP, but not the price level.
21. During the Covid-19 pandemic, Vietnam's velocity was decreasing. This means that the
rate at which money was changing hands
A. increasing. Other things are the same, an increase in velocity increases the price
level.
B. increasing. Other things are the same, an increase in velocity decreases the price
level.
C. decreasing. Other things are the same, a decrease in velocity increases the price
level.
D. decreasing. Other things are the same, a decrease in velocity decreases the price
level. (If V and Y are constant, a certain percentage change in money supply will
proportionally cause a same amount of change in the price level)
22. When Quynh states that inflation by itself always reduces the real return on her saving,
she
A. has committed the inflation fallacy.
B. has expressed the idea behind shoeleather costs.
C. has expressed the idea behind menu costs.
D. has expressed the idea of the inflation tax.
23. People can reduce the inflation tax by

A. reducing savings.
B. increasing deductions on their income tax.
C. reducing cash holdings.
24. You bought some shares of stock and, over the next year, the price per share increased
by 5 percent, as did the price level. Before taxes, you experienced
A. a nominal gain, but no real gain, and you paid no taxes on the transaction.
B. a nominal gain, but no real gain, and you paid taxes on the nominal gain.
C. both a nominal gain and a real gain, and you paid taxes on the nominal gain.
D. both a nominal gain and a real gain, and you paid taxes only on the real gain.
25. If the economy unexpectedly went from inflation to deflation,

A. creditors would gain at the expense of debtors.
B. debtors would gain at the expense of creditors.
C. both debtors and creditors would have increased real wealth.
D. both debtors and creditors would have reduced real wealth.
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TEST 9
1. If a nation’s currency doubles in value on foreign exchange markets, the currency
is said to ................, reflecting a change in the................exchange rate.
A. appreciate, nominal
B. appreciate, real
C. depreciate, nominal
D. depreciate, real
2. If a cup of Starbucks coffee costs 50,000 VND in Saigon and 2 USD in New York and
purchasing-power parity holds, what is the nominal exchange rate?
A. 1/25,000 VND per USD
B. 50,000 VND per USD
C. 25,000 VND per USD
3. The theory of purchasing-power parity says that higher inflation in a nation causes the
nation’s currency to ……………, leaving the.........................exchange rate unchanged.
A. depreciate, nominal
B. appreciate, real
C. depreciate, real
D. appreciate, nominal
4. If a country had a trade deficit of $10 billion and then its exports rose by $20 billion
and its imports rose by $10 billion, its net exports would now be
A. $0
B. $10 billion.
C. -$10 billion.
D. -$20 billion.
5. If domestic residents of other countries purchase $40 billion of Vietnam assets and
Vietnam residents purchase $5 billion of foreign assets, then Vietnam net capital
outflow is
A. -$35 billion and Vietnam has a trade deficit.
B. $35 billion and Vietnam has a trade surplus.
C. $35 billion and Vietnam has a trade deficit.
D. -$35 billion and Vietnam has a trade surplus.
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6. Suppose that more British decide to vacation in Vietnam and that the British purchase
more Vietnam Treasury bonds. Ignoring how payments are made for these purchases,
A. the first action by itself raises Vietnam’s net exports, the second action by itself
raises Vietnam’s net capital outflow.
B. the first action by itself raises Vietnam’s net exports, the second action by
itself lowers Vietnam’s net capital outflow.
C. the first action by itself lowers Vietnam’s net exports, the second action by itself
raises Vietnam’s net capital outflow.
D. the first action by itself lowers Vietnam’s net exports, the second action by itself
lowers Vietnam’s net capital outflow.
7. Suppose that real interest rates in Vietnam rise relative to real interest rates in other
countries. This increase would make foreigners
A. more willing to purchase Vietnam bonds, so Vietnam net capital outflow
would fall.
B. more willing to purchase Vietnam bonds, so Vietnam net capital outflow would
rise.
C. less willing to purchase Vietnam bonds, so Vietnam net capital outflow would
fall.
D. less willing to purchase Vietnam bonds, so Vietnam net capital outflow would
rise.
8. Suppose that Vietnam citizens purchase more cars made in Japan, and Japanese
purchase more bonds issued by Vietnam corporations. Other things the same, these
actions
A. raise both Vietnam net exports and Vietnam net capital outflows.
B. raise Vietnam net exports and lower Vietnam net capital outflows.
C. lower both Vietnam net exports and Vietnam net capital outflows.
D. lower Vietnam net exports and raise Vietnam net capital outflows.
9. Which of the following equations is always correct in an open economy?

A. NX = Y - C - G - I
B. NX = S - I
C. NX = NCO
10. If saving is less than domestic investment, then

A. there is a trade deficit and Y < C + I + G.
B. there is a trade surplus and Y > C + I + G.
C. there is a trade deficit and Y > C + I + G.
D. there is a trade surplus and Y < C + I + G.
11. If a country has a trade deficit
A. it has positive net exports and positive net capital outflow.
B. it has negative net exports and positive net capital outflow.
C. it has positive net exports and negative net capital outflow.
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D. it has negative net exports and negative net capital outflow.
12. If a country has negative net capital outflows, then its net exports are
A. negative and its saving is smaller than its domestic investment.
B. negative and its saving is larger than its domestic investment.
C. positive and its saving is smaller than its domestic investment.
D. positive and its saving is larger than its domestic investment.
13. If a Vietnam government reduced corruption and reformed its tax system so that
businesses found operating here less risky, it’s likely that Vietnam’s
A. net exports would decrease and its net capital outflow would increase.
B. net exports and net capital outflow would decrease.
C. net exports and net capital outflows would increase.
D. net exports would increase and its net capital outflows would decrease.
14. Other things the same, if a country has a trade deficit and saving rises,
A. net capital outflow rises, so the trade deficit increases.
B. net capital outflow falls, so the trade deficit increases.
C. net capital outflow falls, so the trade deficit decreases.
D. net capital outflow rises, so the trade deficit decreases.
15. If a county has 25 billion euros of imports, 15 billion euros of exports, and sells 20
billion euros of assets to foreigners, how many foreign assets do domestic residents
purchase?
A. 5 billion euros
B. 10 billion euros
C. 30 billion euros
16. If citizens of a country are not saving much, it is better to

A. reduce investment.
B. to prevent opportunities for citizens to buy capital assets abroad.
C. have foreigners invest in the domestic economy than no one at all.
D. force citizens to save.
17. The VND is said to depreciate against the USD if

A. the exchange rate falls. Other things are the same, it will cost more USD to buy
Vietnam goods.
B. the exchange rate falls. Other things are the same, it will cost fewer USD to buy
Vietnam goods.
C. the exchange rate rises. Other things the same, it will cost fewer USD to buy
Vietnam goods.
D. the exchange rate rises. Other things the same, it will cost more USD to buy
Vietnam goods.
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18. If a US dollar currently exchanges at a rate of 23,000 VND and someone forecasts that
in a year it will exchanges at a rate of 23,500 VND, then the forecast is given in
A. nominal terms and implies the US dollar will appreciate.
B. real terms and implies the US dollar will appreciate.
C. real terms and implies the US dollar will depreciate.
D. nominal terms and implies the US dollar will depreciate.
19. If the exchange rate is 1.25 New Zealand dollars per U.S. dollar, the price of apples is
$2 a pound in the U.S. and 1 New Zealand dollar per pound in New Zealand, what is the
real exchange rate?
A. 2
B. 2.50
C. 75
D. 1.25
20. Suppose that the real exchange rate between Vietnam and the United States is defined
in terms of baskets of goods. Other things the same, which of the following will
increase the real exchange rate?
A. an increase in the quantity of VND needed in order to buy USD
B. a decrease in the price of U.S. goods
C. an increase in the price in VND of Vietnamese goods
21. Consider an identical basket of goods in both the Vietnam and the U.S. For a given
nominal exchange rate, in which case is it certain that the Vietnam’s real exchange rate
with the U.S. falls?
A. the price of the basket of goods rises in Vietnam and falls in the U.S.
B. the price of the basket of goods rises in the U.S. and Vietnam.
C. the price of the basket of goods falls in both the U.S. and Vietnam.
D. the price of the basket of goods falls in the U.S. and rises in Vietnam.
22. If the Vietnam’s real exchange rate appreciates, Vietnam exports

A. and Vietnam. imports both increase.
B. increase and Vietnam imports decrease.
C. decrease and Vietnam imports increase.
D. and Vietnam imports both decrease.
23. Other things the same, if the Vietnam real exchange rate appreciates, Vietnam net
exports
A. and Vietnam net capital outflow both decrease.
B. and Vietnam net capital outflow both increase.
C. increase and Vietnam net capital outflow decreases.
D. decrease and Vietnam net capital outflow increases.
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24. When the VND gets "weaker" relative to the USD,

A. the U.S. trade deficit with Vietnam rises.
B. the U.S. trade deficit with Vietnam falls.
C. the U.S. trade deficit with Vietnam is unchanged.
D. None of the above necessarily happens.
25. If purchasing-power parity holds but then U.S. prices rise, which of the following
move the exchange rate back towards purchasing-power parity?
A. Vietnam prices rise or Vietnam’s nominal exchange rate falls
B. Vietnam prices fall or Vietnam’s nominal exchange rate falls
C. Vietnam prices rise or Vietnam’s nominal exchange rate rises
D. Vietnam prices fall or Vietnam’s nominal exchange rate rises
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TEST 10
1. Holding other things constant, an increase in a nation’s interest rate reduces
A. national saving only.
B. domestic investment and the net capital outflow.
C. national saving and domestic investment.
D. national saving and the net capital outflow.
2. Holding other things constant, an appreciation of a nation’s currency causes

A. both exports and imports to fall.
B. exports to fall and imports to rise. When a currency appreciates in value
in the market for foreign-currency exchange, domestic goods become
more expensive relative to foreign goods. This appreciation encourages
imports and discourages exports.
C. both exports and imports to rise.
D. exports to rise and imports to fall.
3. The government in an open economy cuts spending to reduce the budget deficit. As a
result, the interest rate ………………, leading to a capital.........................and a real
exchange rate ……………….
A. falls, outflow, depreciation
B. rises, inflow, appreciation
C. falls, inflow, appreciation
D. falls, outflow, appreciation
4. Because the open-economy macroeconomic model focuses on the long run, it is assumed
that
A. GDP, but not the price level is given.
B. the price level, but not GDP is given.
C. both the price level and GDP are given.
D. the price level and GDP are variables to be determined by the model.
5. The open-economy macroeconomic model examines the determination of

A. unemployment and the exchange rate.
B. the trade balance and the exchange rate.
C. the output growth rate and the inflation rate.
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D. the output growth rate and the real interest rate.
6. The open-economy macroeconomic model includes

A. both the market for loanable funds and the market for
foreign-currency exchange.
B. only the market for foreign-currency exchange.
C. neither the market for loanable funds nor the market for foreign-currency
exchange.
D. only the market for loanable funds.
7. In the open-economy macroeconomic model, the supply of loanable funds equals

A. national saving. The demand for loanable funds comes only from
domestic investment.
B. private saving. The demand for loanable funds comes only from domestic
investment.
C. private saving. The demand for loanable funds comes from domestic
investment + net capital outflow.
D. national saving. The demand for loanable funds comes from domestic
investment + net capital outflow.
8. If interest rates rise in the Vietnam, then other things the same
A. foreigners would buy fewer Vietnamese bonds which reduces the
quantity of loanable funds demanded in Vietnam.
B. foreigners would buy more Vietnamese bonds which increases
the quantity of loanable funds demanded in Vietnam.
C. foreigners would buy fewer Vietnamese bonds which increases
D. foreigners would buy more Vietnamese bonds which reduces the
quantity of loanable funds demanded in Vietnam.
9. An increase in real interest rates in Vietnam

A. encourages both Vietnamese and foreign residents to buy Vietnamese
assets.
B. encourages Vietnamese residents to buy Vietnamese assets,
but discourages foreign residents from buying Vietnamese
assets.
C. discourages both Vietnamese and foreign residents from
buying Vietnamese assets.
D. encourages foreign residents to buy Vietnamese assets, but
discourages Vietnamese residents from buying Vietnamese assets.
10. Which of the following is the most likely response to a decrease in the Vietnamese real
interest rate?
A. a Vietnamese company decides to expand its factory
B. a Vietnamese citizen decides to purchase fewer foreign bonds
C. a Singaporean mutual fund decides to increase its deposits at a
Vietnamese bank
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D. All of the above are consistent.
11. Other things the same, if the real interest rate in a country falls, domestic residents will
desire to purchase
A. fewer capital goods and fewer foreign bonds.
B. more foreign bonds but fewer capital goods.
C. more capital goods but fewer foreign bonds.
D. more capital goods and more foreign bonds.
12. The value of net exports equals the value of

A. public saving.
B. national saving.
C. national saving - domestic investment.
D. national saving - net capital outflow.
13. In the open-economy macroeconomic model, the supply of dollars in the market for
foreign-currency exchange comes from
A. net exports - net capital outflow
B. net exports + net capital outflow
C. net capital outflow
D. net exports
14. Other things the same, if the Vietnam’s real exchange rate depreciated, then Vietnam’s
net exports would
A. fall and the quantity of dollars demanded in the market for
foreign-currency exchange would fall.
B. rise and the quantity of dollars demanded in the market for
foreign-currency exchange would fall.
C. rise and the quantity of dollars demanded in the market for
foreign-currency exchange would rise.
D. fall and the quantity of dollars demanded in the market for
foreign-currency exchange would rise.
15. In the open-economy macroeconomic model, net capital outflow rises if

A. the real interest rate falls. Net capital outflow does not depend on the
exchange rate.
B. either the exchange rate falls or the real interest rate rises.
C. the real interest rate rises. Net capital outflow does not depend on the
exchange rate.
D. either the exchange rate rises or the real interest rate falls.
16. If Vietnam’s real interest rate rises, then its

A. net capital outflow rises and its net exports fall.
B. net capital outflow and net exports rise.
C. net capital outflow and net exports fall.
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D. net capital outflow falls and its net exports rise.
17. If a country raises its budget deficit, then its

A. net capital outflow and net exports fall.
B. net capital outflow falls and net exports rise.
C. net capital outflow rises and net exports fall.
D. net capital outflow and net exports rise.
18. An increase in the budget deficit

A. raises net capital outflow and reduces domestic investment.
B. reduces net capital outflow and raises domestic investment.
C. reduces net capital outflow and domestic investment.
D. raises net capital outflow and domestic investment
19. If the Vietnamese government raised its budget deficit, then the VND would
A. depreciate and Vietnamese net exports would fall.
B. appreciate and Vietnamese net exports would rise.
C. appreciate and Vietnamese net exports would fall.
D. depreciate and Vietnamese net exports would rise.
20. How many more lessons are needed in order to complete the course?
A. 2
B. 3
C. 4
D. Any of the above is correct.
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TEST 11
1. A change in the expected price level shifts

A. the aggregate-demand curve.
B. the long-run aggregate-supply curve, but not the short-run aggregate-supply curve.
C. both the short-run and the long-run aggregate supply curves.
D. the short-run aggregate-supply curve, but not the long-run aggregate-supply curve.
2. Stagflation is caused by
A. a rightward shift in the aggregate-supply curve.
B. a rightward shift in the aggregate-demand curve.
C. a leftward shift in the aggregate-supply curve.
D. a leftward shift in the aggregate-demand curve.
3. Which of the following is not correct?
A. During a recession firms cut back production and workers are laid off.
B. A depression is a severe recession.
C. A recession is a period of declining real incomes and declining unemployment.
D. The model of aggregate demand and aggregate supply is used by most economists to
analyze short-run fluctuations.
4. A relatively mild period of falling incomes and rising unemployment is called a(n)
A. depression.
B. recession.
C. expansion.
D. business cycle.
Câu Hỏi 5: Which of the following is correct?
A. Real GDP is the variable most commonly used to measure short-run economic
fluctuations. It is almost impossible to predict these fluctuations with much accuracy.
B. Nominal GDP is the variable most commonly used to measure short-run economic
fluctuations. These fluctuations can be predicted with some accuracy.
C. Real GDP is the variable most commonly used to measure short-run economic
fluctuations. These fluctuations can be predicted with some accuracy.
D. Nominal GDP is the variable most commonly used to measure short-run economic
fluctuations. It is almost impossible to predict these fluctuations with much accuracy.
Câu Hỏi 6: During recessions which type of spending falls?
A. investment but not consumption
B. consumption and investment
C. consumption but not investment
D. neither consumption nor investment
Câu Hỏi 7: The model of short-run economic fluctuations focuses on

A. the price level and real GDP.
B. productivity and economic growth.
C. the neutrality of money and inflation.
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Câu Hỏi 8: The aggregate-demand curve shows the

A. quantity of labor and other inputs that firms want to buy at each price level.
B. quantity of domestically produced goods and services that households want to buy at
each price level.
C. quantity of labor and other inputs that firms want to buy at each inflation rate.
D. quantity of domestically produced goods and services that households, firms, the
government, and customers abroad want to buy at each price level.
9. The curve that shows the quantity of goods and services that firms produce and sell
A. as it relates to the overall price level is called the aggregate-demand curve.
B. as it relates to the quantity of goods and services that buyers want to buy is called the
aggregate-demand curve.
C. as it relates to the overall price level is called the aggregate-supply curve.
D. as it relates to the quantity of goods and services that buyers want to buy is called the
aggregate-supply curve.
Câu Hỏi 10: Which of the following would help explain why the aggregate demand curve
slopes downward?
A. A higher price level increases real wealth, which stimulates spending on consumption.
B. An unexpectedly low price level raises the real wage, which causes firms to hire fewer
workers and produce a smaller quantity of goods and services.
C. A lower price level reduces the interest rate, which encourages greater spending on
investment goods.
D. A lower price level causes domestic interest rates to rise and the real exchange rate to
appreciate, which stimulates spending on net exports.
Câu Hỏi 11: Other things the same, if the price level rises, people
A. increase foreign bond purchases, so the supply of dollars in the market for foreign-
currency exchange increases.
B. decrease foreign bond purchases, so the supply of dollars in the market for
foreign-currency exchange increases.
C. foreign bond purchases, so the supply of dollars in the market for foreign-currency
exchange decreases.
D. increase foreign bond purchases, so the supply of dollars in the market for foreign-
currency exchange decreases.
Câu Hỏi 12: As the price level rises,

A. the exchange rate falls, so net exports rise.
B. the exchange rate rises, so net exports fall.
C. the exchange rate rises, so net exports rise.
D. the exchange rate falls, so net exports fall.
Câu Hỏi 13: The long-run aggregate supply curve shifts right if
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A. human capital increases.

B. the capital stock increases.
C. technology advances.
14: Which of the following shifts both the short-run and long-run aggregate supply right?
A. an increase in the actual price level
B. an increase in the expected price level
C. an increase in the capital stock
Câu Hỏi 15: The price level rises in the short run if
A. aggregate demand shifts right or aggregate supply shifts left.
B. aggregate demand or aggregate supply shifts right.
C. aggregate demand or aggregate supply shifts right.

D. aggregate demand shifts left or aggregate supply shifts right.
16: Which of the following would cause prices and real GDP to rise in the short run?
A. an increase in the money supply
B. an increase in taxes.
C. a decrease in the capital stock
D. an increase in the expected price level
17: If the government repeals an investment tax credit and increases income taxes,
A. real GDP and the price level rise.
B. real GDP falls, and the price level could rise, fall, or stay the same.
C. real GDP and the price level fall.
D. real GDP rises, and the price level could rise, fall, or stay the same.
18: Which of the following is a lesson concerning shifts in aggregate demand?

A. they contribute to fluctuations in output.
B. in the long-run they change real output, but not the price level.
C. policymakers are unable to mitigate the severity of economic fluctuations.
19: If there are floods or droughts or a decrease in the availability of raw materials
A. aggregate supply shifts right.
B. output falls in the short run.
C. prices fall in the short run.
Câu Hỏi 20: Suppose that there is an increase in the costs of production that shifts the short-run
aggregate supply curve left. If there is no policy response, then eventually
A. because unemployment is high, wages will be bid down and short-run aggregate
supply will shift right.
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B. because unemployment is low, wages will be bid down and short-run aggregate
supply will shift right.
C. because unemployment is low, wages will be bid up and short-run aggregate supply
will shift right.
D. because unemployment is high, wages will be bid up and short-run aggregate supply
will shift right.
21: Which of the following would cause prices to rise and real GDP to fall in the short run?
A. an increase in the expected price level.
B. an increase in the money supply.
C. an increase in the capital stock.
D. an increase in taxes.
22: Which of the following will reduce the price level and real output in the short run?
A. technical progress
B. an decrease in oil prices
C. an increase in government purchases.
D. a decrease in the money supply
23: Suppose the economy is in long-run equilibrium. If there is an increase in government
purchases at the same time there is a large increase in the price of oil, then in the short-run
A. Real GDP will rise and the price level might rise, fall, or stay the same.
B. real GDP will fall and the price level might rise, fall, or stay the same.
C. price level will rise, and real GDP might rise, fall, or stay the same.
D. the price level will fall, and real GDP might rise, fall, or stay the same.
24: Suppose the Vietnam economy is in long-run equilibrium. In a short span of time, there is
an increase in the money supply, a tax decrease, a pessimism about future business conditions,
and a fall in the value of the U.S. dollar. In the short run, we would expect
A. the price level and real GDP both to rise.
B. the price level and real GDP both to fall.
C. the price level and real GDP both to stay the same.
D. All of the above are possible.
25: The aggregate demand and aggregate supply model implies monetary neutrality
A. in both the short run and the long run.
B. in neither the short run nor long run.
C. only in the short run.
D. only in the long run.
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TEST 12
1. If the government wants to contract aggregate demand, it can...................government
purchases or.................taxes.
A. decrease, increase
B. decrease, decrease
C. increase, decrease
D. increase, increase
2. With the economy in a recession because of inadequate aggregate demand, the

government increases its purchases by $1,200. Suppose the central bank adjusts the
money supply to hold the interest rate constant, investment spending is fixed, and the
marginal propensity to consume is 2/3. How large is the increase in aggregate demand?
A. $400
B. $800
C. $1,800
D. $3,600
3. Monetary policy
A. cannot be accurately described in terms of the interest rate or in terms of the money
supply.
B. must be described in terms of interest-rate targets.
C. must be described in terms of money-supply targets.
D. can be described either in terms of the money supply or in terms of the interest rate.
4. People choose to hold a larger quantity of money if

A. the interest rate falls, which causes the opportunity cost of holding money to rise.
B. the interest rate falls, which causes the opportunity cost of holding money to fall.
C. the interest rate rises, which causes the opportunity cost of holding money to rise.
D. the interest rate rises, which causes the opportunity cost of holding money to fall.
5. In which of the following cases would the quantity of money demanded be smallest?
A. r = 0.06, P = 1.0
B. r = 0.05, P = 1.0
C. r = 0.06, P = 1.2
D. r = 0.04, P = 1.2
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6. According to liquidity preference theory, a decrease in money demand for some

reason other than a change in the price level causes
A. the interest rate to rise, so aggregate demand shifts left.
B. the interest rate to fall, so aggregate demand shifts left.
C. the interest rate to rise, so aggregate demand shifts right.
D. the interest rate to fall, so aggregate demand shifts right.
7. If people decide to hold less money, then

A. money demand decreases, there is an excess supply of money, and interest rates
rise.
B. money demand decreases, there is an excess supply of money, and interest rates fall.
C. money demand increases, there is an excess demand for money, and interest rates fall.
D. money demand increases, there is an excess demand for money, and interest rates rise.
8. According to liquidity preference theory, the slope of the money demand curve
is explained as follows:
A. Interest rates rise as the Fed reduces the quantity of money demanded.
B. Interest rates fall as the Fed reduces the supply of money.
C. People will want to hold less money as the cost of holding it falls.
D. People will want to hold more money as the cost of holding it falls.
9. When households find themselves holding too much money, they respond by
A. selling interest-earning financial assets, which eliminates the excess supply of money.
B. holding the extra money and interest rates rise.
C. purchasing interest-earning financial assets and interest rates rise.
D. purchasing interest-earning financial assets and interest rates fall.
10. The interest rate falls if

A. the price level falls or the money supply falls.
B. the price level falls or the money supply rises.
C. the price level rises or the money supply falls.
D. the price level rises or the money supply rises.
11. If, at some interest rate, the quantity of money supplied is less than the quantity
of money demanded, people will desire to
A. sell interest-bearing assets, causing the interest rate to decrease.
B. sell interest-bearing assets, causing the interest rate to increase.
C. buy interest-bearing assets, causing the interest rate to decrease.
D. buy interest-bearing assets, causing the interest rate to increase.
12. Which of the following is correct?
A. A higher price level shifts money demand rightward.
B. When money demand shifts rightward, the interest rate rises.
C. A higher interest rate reduces the quantity of goods and services demanded.
13. If the SBV increases the money supply,
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A. the interest rate increases, which tends to reduce stock prices.

B. the interest rate decreases, which tends to raise stock prices.
C. the interest rate decreases, which tends to reduce stock prices.
D. the interest rate increases, which tends to raise stock prices.
14. If there is excess money supply, people will
A. deposit more into interest-bearing accounts, and the interest rate will fall.
B. deposit more into interest-bearing accounts, and the interest rate will rise.
C. withdraw money from interest-bearing accounts, and the interest rate will fall.
D. withdraw money from interest-bearing accounts, and the interest rate will rise.
15. Other things the same, which of the following responses would we expect to result from
a decrease in Vietnam interest rates?
A. Vietnam citizens decide to hold more foreign bonds.
B. People choose to hold more currency.
C. Your company decides to purchase new equipment for its factory.
16. According to liquidity preference theory, an increase in the price level causes
the interest rate to
A. increase, which increases the quantity of goods and services demanded.
B. increase, which decreases the quantity of goods and services demanded.
C. decrease, which increases the quantity of goods and services demanded.
D. decrease, which decreases the quantity of goods and services demanded.
17. An increase in the money supply will
A. reduce interest rates, decreasing investment and increasing aggregate demand.
B. increase interest rates, decreasing investment and aggregate demand.
C. reduce interest rates, increasing investment and aggregate demand.
D. increase interest rates, increasing investment and aggregate demand.
18. If the SBV conducts open-market sales, which of the following quantities increase(s)?
A. interest rates, prices, and investment spending
B. interest rates and prices, but not investment spending
C. interest rates and investment, but not prices
D. interest rates, but not investment or prices
19. If the stock market crashes, then
A. aggregate demand increases, which the SBV could offset by purchasing the
money supply.
B. aggregate demand decreases, which the SBV could offset by selling bonds.
C. aggregate demand decreases, which the SBV could offset by purchasing bonds.
D. aggregate demand increases, which the SBV could offset by selling bonds.
20. In a certain economy, when income is $500, consumer spending is $375. The value
of the multiplier for this economy is 5. It follows that, when income is $510,
consumer spending is
A. $381.67.
B. $378.
C. $383.
D. $383.33.
21. The logic of the multiplier effect applies
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A. only to changes in government spending.

B. to any change in spending on any component of GDP.
C. only when the crowding-out effect is sufficiently strong.
D. only to changes in the money supply.
22. The government builds a new water-treatment plant. The owner of the company that
builds the plant pays her workers. The workers increase their spending. Firms from
which the workers buy goods increase their output. This type of effect on spending
illustrates
A. the wealth effect.
B. the crowding-out effect.
C. the multiplier effect.
D. the Fisher effect.
23. The multiplier effect states that there are additional shifts in aggregate demand from
fiscal policy, because it
A. decreases income and thereby increases consumer spending.
B. increases income and thereby increases consumer spending.
C. increases the money supply and thereby reduces interest rates.
D. reduces investment and thereby increases consumer spending.
24. If the MPC = 4/5, then the government purchases multiplier is
A. 5/4.
B. 5.
C. 20.
D. 4/5.
25. The marginal propensity to consume (MPC) is defined as the fraction of
A. total income that a household either consumes or saves.
B. extra income that a household either consumes or saves.
C. total income that a household consumes rather than saves.
D. extra income that a household consumes rather than saves.
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1. Which of the following questions is more likely to be studied by a microeconomist than

2. Which of the following is not a question addressed by macroeconomists?

3. Much of macroeconomics attempts to explain

A. changes in the growth rate of state government spending.

A. the inflation rate

5. For an economy as a whole,

A. wages must equal income.

6. Which of the following statements about GDP is correct?

7. For an economy as a whole, income must equal expenditure because

A. The number of firms is equal to the number of households in an economy.

A. income and expenditure both fall.

A. income rises and expenditure falls.

10. In the actual economy, households

A. spend all of their income.

11. According to the circular-flow diagram GDP

12. Which of the following is a way to compute GDP?

A. total income earned.

Year Nominal GDP

1974 $2000 100

1975 $3000 120

1976 $3750 150

1977 $6000 200

From 1976 to 1977,

A. inflation was 33.3% and output grew at a rate of 60%.

Year Price of Ice Quantity of Ice Price of Pie Quantity of

2008 $2.50 40 $5.00 20

2009 $3.00 50 $6.00 25

2010 $4.00 40 $6.00 30

In 2009, this country’s

A. Real GDP rises by 10 percent, while nominal GDP is unchanged.

17. A recession has traditionally been defined as a period during which

A. nominal GDP declines for four consecutive quarters.

18. GDP is not a perfect measure of well-being; for example,

A. GDP excludes the value of volunteer work.

B. GDP does not address the distribution of income.

19. GDP does not reflect

A. the value of leisure.

A. It more than doubled.

Link quizlet for revision:

2. The consumer price index is used to

3. Economists use the term inflation to describe a situation in which

5. The inflation rate is defined as the:

9. The CPI is calculated:

A. income in the short run.

3. Which of the following is a good gauge of economic progress?

4. Productivity is the amount of goods and services

A. produced for each hour of a worker’s time. It is not linked to a nation’s

5. A nation’s standard of living is determined by

A. the quantity of natural resources with which it is endowed.

6. A nation's standard of living is best measured by its

A. Country A must have a higher standard of living than country B.

9. Which of the following items plays a role in determining productivity?

A. “capital” and “physical capital”

12. Industrial machinery is an example of

13. Which of the following is not an example of physical capital?

14. Which of the following is an example of physical capital?

A. the computer a secretary uses

15. Human capital is the