In Figure 4-10 above, expansionary fiscal policy accommodated by the Fed can be pictured as a movement from points
A) A to D.
B) A to C.
C) D to B.
D) B to D.
E) A to B.
B
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An increase in the demand for American-made goods will
A) decrease the supply of dollars on the foreign exchange market. B) decrease the demand for dollars on the foreign exchange market. C) increase the demand for dollars on the foreign exchange market. D) increase the supply of dollars on the foreign exchange market.
Employees at the hospital have negotiated a 3 percent increase in wages for the next year, based on their inflation expectations. If inflation is actually 5 percent over the next year, which of the following will occur?
A) Real wages for hospital employees will fall. B) The increase in inflation is expected. C) Inflation will be 3 percent the following year. D) Unemployment of hospital employees will rise.
If it costs $2,000 to pick up all the litter along a 100-mile stretch of highway, then the cost of the negative externality associated with the litter is
a. $0 b. more than $0, but less than $2,000 c. $2,000 d. more than $2,000 . but finite e. infinite
Suppose Bond X has an original price of $1,000 and a coupon rate of 8% and therefore is worth $1,080 after a year. The market has now changed so that other bonds are selling with a coupon rate of 12%. How would you calculate the right price to pay for Bond X?
a. Calculate the dollar figure that would generate $1,120 at the current interest rate and pay no more than that for the bond. b. The right price for a bond is always the face value plus the interest rate for one year. c. With a 12% coupon rate, the bond’s face value is now $880, so pay no more than that for the bond. d. Calculate the dollar figure that would generate $1,080 at an interest rate of 12% and pay no more than that for the bond.