Question

1.Which of the following shifts short-run aggregate supply left ?

Select one:

a. an increase in price expectations

b. a decrease in the price of oil

c. an increase in the actual price level

d. a decrease in the money supply

2. The short-run effects of an increase in the expected price level include

Select one:

a. a lower level of output and a lower price level.

b.a lower level of output and a higher price level.

c. a higher level of output and a higher price level.

d. a higher level of output and a lower price level.

3. In the U.S. a digital camera costs $200. The same camera in London sells for 90 pounds. If the exchange rate were .50 pounds per dollar, then which of the following would be correct ?

Select one:

a. The real exchange rate is less than 1. A person in London with $200 could exchange them for pounds and have more than enough to buy the camera there.

b. The real exchange rate is less than 1. A person in London with $200 could exchange them for pounds but then wouldn’t have enough to buy the camera.

c. The real exchange rate is greater than 1. A person in London with $200 could exchange them for pounds and have more than enough to buy the camera there.

d. The real exchange rate is greater than 1. A person in London with $200 could exchange them for pounds but then wouldn’t have enough to buy the camera there.

4. Other things the same, an increase in the U.S. real interest rate induces Select one:

a. Americans to buy more foreign assets, which increases U.S. net capital outflow.

b. foreigners to buy more U.S. assets, which reduces U.S. net capital outflow.

c. foreigners to buy more U.S. assets, which increases U.S. net capital outflow.

d. Americans to buy more foreign assets, which reduces U.S. net capital outflow.

Answer 1

1) option A is correct because it will encourage producers to supply more in future and less units now..

2) option A is correct because it will shift the aggregate demand curve to the left and this will decrease both price level and real GDP in the short run

3) option C is correct. Real exchange rate is 0.50 X 200 / 90 = 1.1. the person who has 200 dollars can purchase two cameras from London and sell them in the United States and still have $20 left

4) option B is correct