Suppose that the Danish Parliament passes a large tax increase and taxes now equals 400. The aggregate output of the Danish economy is characterized as follows. Consumption: C = 100 + 0.5(Y-T) Investment: I = 300 Government: G = 200 Taxes: T = 400 The tax multiplier for the Danish economy is -1 .

Suppose that the Danish Parliament passes a large tax increase and taxes now equals 400. The aggregate output of the Danish economy is characterized as follows. 

Consumption: C = 100 + 0.5(Y-T)
Investment: I = 300
Government: G = 200
Taxes: T = 400 

The tax multiplier for the Danish economy is  -1 . 

Hint: Don't forget to include the negative sign, if your answer is a negative number.

Answer Key: -1

Suppose that the Danish Parliament passes a large tax increase and taxes now equals 400. The aggregate output of the Danish economy is characterized as follows. Consumption: C = 100 + 0.5(Y-T) Investment: I = 300 Government: G = 200 Taxes: T = 400 The new level of equilibrium output (Y) in Denmark is 800 .

Suppose that the Danish Parliament passes a large tax increase and taxes now equals 400. The aggregate output of the Danish economy is characterized as follows. 

Consumption: C = 100 + 0.5(Y-T)
Investment: I = 300
Government: G = 200
Taxes: T = 400 

The new level of equilibrium output (Y) in Denmark is  800 . 

Answer Key: 800

Suppose the aggregate output of the Danish economy is characterized as follows. Consumption: C = 100 + 0.5(Y-T) Investment: I = 300 Government: G = 200 Taxes: T = 200 Assume that Denmark is a closed economy, with no net exports. Given the information, the marginal propensity to consume (mpc) in Denmark is 0.5 .

Suppose the aggregate output of the Danish economy is characterized as follows. 

Consumption: C = 100 + 0.5(Y-T)
Investment: I = 300
Government: G = 200
Taxes: T = 200 

Assume that Denmark is a closed economy, with no net exports. 

Given the information, the marginal propensity to consume (mpc) in Denmark is  0.5 . 

Answer Key: 0.5

Suppose the aggregate output of the Danish economy is characterized as follows. Consumption: C = 100 + 0.5(Y-T) Investment: I = 300 Government: G = 200 Taxes: T = 200 Assume that Denmark is a closed economy, with no net exports. Given the information, national savings in Denmark is 300 .

Suppose the aggregate output of the Danish economy is characterized as follows. 

Consumption: C = 100 + 0.5(Y-T)
Investment: I = 300
Government: G = 200
Taxes: T = 200 

Assume that Denmark is a closed economy, with no net exports. 

Given the information, national savings in Denmark is  300 . 

Answer Key: 300

Suppose the aggregate output of the Danish economy is characterized as follows. Consumption: C = 100 + 0.5(Y-T) Investment: I = 300 Government: G = 200 Taxes: T = 200 Assume that Denmark is a closed economy, with no net exports. Given the information, the equilibrium level of consumption (C) in Denmark is 500 .

Suppose the aggregate output of the Danish economy is characterized as follows. 

Consumption: C = 100 + 0.5(Y-T)
Investment: I = 300
Government: G = 200
Taxes: T = 200 

Assume that Denmark is a closed economy, with no net exports. 

Given the information, the equilibrium level of consumption (C)  in Denmark is  500 . 

Answer Key: 500

Suppose the aggregate output of the Danish economy is characterized as follows. Consumption: C = 100 + 0.5(Y-T) Investment: I = 300 Government: G = 200 Taxes: T = 200 Assume that Denmark is a closed economy, with no net exports. Given the information, the equilibrium level of output in Denmark is 1000 .

Suppose the aggregate output of the Danish economy is characterized as follows. 

Consumption: C = 100 + 0.5(Y-T)
Investment: I = 300
Government: G = 200
Taxes: T = 200 

Assume that Denmark is a closed economy, with no net exports. 

Given the information, the equilibrium level of output in Denmark is  1000 . 

Answer Key: 1000

Consider a basket of goods that costs $72.00 in the United States. The same basket of goods costs 224.00 pesos in Mexico. The nominal exchange rate is 14 pesos per dollar. Given the information above, the real exchange rate is 4.50 baskets of Mexican goods per basket of U.S. goods. Suppose that the nominal exchange rate increases from 14.00 pesos per dollar to 28.00 pesos per dollar. If the prices of the basket remain unchanged in both the U.S. and Mexico, the real exchange rate between the U.S. and Mexican baskets of goods will change to 9.00 baskets of Mexican goods per basket of U.S. goods.

Consider a basket of goods that costs $72.00 in the United States. The same basket of goods costs 224.00 pesos in Mexico. The nominal exchange rate is 14 pesos per dollar.
Given the information above, the real exchange rate is  4.50 baskets of Mexican goods per basket of U.S. goods. Suppose that the nominal exchange rate increases from 14.00 pesos per dollar to 28.00 pesos per dollar. If the prices of the basket remain unchanged in both the U.S. and Mexico, the real exchange rate between the U.S. and Mexican baskets of goods will change to  9.00 baskets of Mexican goods per basket of U.S. goods. 

[Round your answer to the nearest two decimal places]

Answer Key: 4.50, 9.00

The following table shows the nominal exchange rate, in terms of U.S. dollars per unit of foreign currency. Suppose that an handmade bookcase in Mexico is priced at 2000 Mexican pesos. The approximate U.S. dollar price of the bookcase would be $ 185.20 .

The following table shows the nominal exchange rate, in terms of U.S. dollars per unit of foreign currency.
Suppose that an handmade bookcase in Mexico is priced at 2000 Mexican pesos. The approximate U.S. dollar price of the bookcase would be $ 185.20 . 

[Round your answer to two decimal places]

Answer Key: 185.20

Suppose the following transactions occur during 2012. 1. Sung, a liquor store owner in the United States, buys 50 bottles of champagne from a French vineyard at a price of $75 per bottle. 2. Autozone, a U.S. company, sells 100 spark plugs to a Korean car company at $5 per spark plug. 3. Tim, a U.S. citizen, pays $670 for a surfboard he orders from Greatwaves (a U.S. company). Based on these transactions, U.S. net exports (NX) in 2012 is $ -3250 .

Suppose the following transactions occur during 2012.
1. Sung, a liquor store owner in the United States, buys 50 bottles of champagne from a French vineyard at a price of $75 per bottle.
2. Autozone, a U.S. company, sells 100 spark plugs to a Korean car company at $5 per spark plug.
3. Tim, a U.S. citizen, pays $670 for a surfboard he orders from Greatwaves (a U.S. company).
Based on these transactions, U.S. net exports (NX) in 2012 is $ -3250 . 

[Note: If your answer is negative don't forget to enter a minus sign] 

Answer Key: -3250

Suppose the following transactions occur during 2012. 1. Sung, a liquor store owner in the United States, buys 50 bottles of champagne from a French vineyard at a price of $75 per bottle. 2. Autozone, a U.S. company, sells 100 spark plugs to a Korean car company at $5 per spark plug. 3. Tim, a U.S. citizen, pays $670 for a surfboard he orders from Greatwaves (a U.S. company). Based on these transactions, U.S. exports (EX) in 2012 is $ 500 .

Suppose the following transactions occur during 2012.
1. Sung, a liquor store owner in the United States, buys 50 bottles of champagne from a French vineyard at a price of $75 per bottle.
2. Autozone, a U.S. company, sells 100 spark plugs to a Korean car company at $5 per spark plug.
3. Tim, a U.S. citizen, pays $670 for a surfboard he orders from Greatwaves (a U.S. company).
Based on these transactions, U.S. exports (EX) in 2012 is $ 500 . 

Answer Key: 500

Suppose the following transactions occur during 2012. 1. Sung, a liquor store owner in the United States, buys 50 bottles of champagne from a French vineyard at a price of $75 per bottle. 2. Autozone, a U.S. company, sells 100 spark plugs to a Korean car company at $5 per spark plug. 3. Tim, a U.S. citizen, pays $670 for a surfboard he orders from Greatwaves (a U.S. company). Based on these transactions, U.S. imports (IM) for 2012 is $ 3750 .

Suppose the following transactions occur during 2012. 

1. Sung, a liquor store owner in the United States, buys 50 bottles of champagne from a French vineyard at a price of $75 per bottle.
2. Autozone, a U.S. company, sells 100 spark plugs to a Korean car company at $5 per spark plug.
3. Tim, a U.S. citizen, pays $670 for a surfboard he orders from Greatwaves (a U.S. company).
Based on these transactions, U.S. imports (IM) for 2012 is $ 3750 . 

Answer Key: 3750

The nominal interest rate is currently 7% per year and the current expected inflation is 1%. Suppose the Fed unexpectedly increases the growth rate of the money supply, causing the inflation rate to rise unexpectedly from 1% to 3% per year. As a result of this change in inflation, the nominal interest rate will now be 9 %. Assume that the classical dichotomy holds.

The nominal interest rate is currently 7% per year and the current expected inflation is 1%.  Suppose the Fed unexpectedly increases the growth rate of the money supply, causing the inflation rate to rise unexpectedly from 1% to 3% per year.  As a result of this change in inflation, the nominal interest rate will now be  9 %.  Assume that the classical dichotomy holds.

[Round your answer to the nearest whole number.  No decimals in your answer]


Answer Key: 9

Suppose that the nominal interest rate is 7% per year. If banks and depositors expect an inflation rate of 1% per year, the expected real interest rate is 6 % per year.

Suppose that the nominal interest rate is 7% per year. If banks and depositors expect an inflation rate of 1% per year, the expected real interest rate is  6 % per year. 

[You do no need to include any decimal points]

Answer Key: 6

Consider a simple economy that produces only loaves of bread. The table contains information on the economy's output, money supply, velocity, and price level. For example, in 2009, the money supply was $200, the price of a loaf of bread was $5, and the economy produced 400 loaves of bread. Use the information in the table and your previous answers. The money supply grew at a rate of 8.0 % from 2009 to 2010 and the inflation rate (percentage change in prices) grew at a rate of 8.0 % from 2009 to 2010.

Consider a simple economy that produces only loaves of bread. The table contains information on the economy's output, money supply, velocity, and price level. For example, in 2009, the money supply was $200, the price of a loaf of bread was $5, and the economy produced 400 loaves of bread.
Use the information in the table and your previous answers.
The money supply grew at a rate of  8.0 % from 2009 to 2010 and the inflation rate (percentage change in prices) grew at a rate of  8.0 % from 2009 to 2010. 

[Use one decimal place in your answer]




Answer Key: 8.0, 8.0

Consider a simple economy that produces only loaves of bread. The table contains information on the economy's output, money supply, velocity, and price level. For example, in 2009, the money supply was $200, the price of a loaf of bread was $5, and the economy produced 400 loaves of bread. Using the information in the table, the nominal GDP in 2009 was $ 2000 , whereas in 2010, nominal GDP was $ 2160 .

Consider a simple economy that produces only loaves of bread. The table contains information on the economy's output, money supply, velocity, and price level. For example, in 2009, the money supply was $200, the price of a loaf of bread was $5, and the economy produced 400 loaves of bread.
Using the information in the table, the nominal GDP in 2009 was $ 2000 , whereas in 2010, nominal GDP was $ 2160 . 

Answer Key: 2000, 2160

Consider a simple economy that produces only loaves of bread. The table contains information on the economy's output, money supply, velocity, and price level. For example, in 2009, the money supply was $200, the price of a loaf of bread was $5, and the economy produced 400 loaves of bread. Using the information in the table, the price level in 2010 was $ 5.40 .

Consider a simple economy that produces only loaves of bread. The table contains information on the economy's output, money supply, velocity, and price level. For example, in 2009, the money supply was $200, the price of a loaf of bread was $5, and the economy produced 400 loaves of bread.
Using the information in the table, the price level in 2010 was $ 5.40 . 

[Use 2 decimal places for your answer]

Answer Key: 5.40

Consider a simple economy that produces only loaves of bread. The table contains information on the economy's output, money supply, velocity, and price level. For example, in 2009, the money supply was $200, the price of a loaf of bread was $5, and the economy produced 400 loaves of bread. Using the information in the table, the velocity of money in 2009 was 10 .

Consider a simple economy that produces only loaves of bread. The table contains information on the economy's output, money supply, velocity, and price level. For example, in 2009, the money supply was $200, the price of a loaf of bread was $5, and the economy produced 400 loaves of bread. 

Using the information in the table, the velocity of money in 2009 was  10 . 

Answer Key: 10

If a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is

If a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is

A. 1.60, and the supply is inelastic.


B. 0.63, and the supply is inelastic.

C. 1.60, and the supply is elastic.

D. 0.63, and the supply is elastic.


Answer Key: B

Data recently collected from Orlando reveals that when the price of a Universal Studios ticket increased by 25%, the quantity of Universal Studios tickets demanded fell by 10%, and the quantity of local area car rentals fell by 30%.

Data recently collected from Orlando reveals that when the price of a Universal Studios ticket increased by 25%, the quantity of Universal Studios tickets demanded fell by 10%, and the quantity of local area car rentals fell by 30%.

1. What is the cross-price elasticity between Universal Studio tickets and car rentals?

A. 3

B. 0.83


C. -1.2

D. -0.83


Answer Key: C

2. Which of the following statements must be TRUE based on this information?

A. The demand for Universal Studio tickets are price elastic.

B. Universal Studio tickets and car rentals are substitutes.

C. Universal Studio tickets and car rentals are unrelated.


D. Universal Studio tickets and car rentals are complements.

Data collected in San Francisco reveals that a 5% decrease in income leads to the following changes: (1) a 4% increase in the quantity demanded of Muni bus rides. (2) a 3% decrease in the quantity demanded of marijuana. (3) a 13% decrease in the quantity demanded of San Francisco Giants tickets. The income elasticity of San Francisco Giants tickets is _______.

Data collected in San Francisco reveals that a 5% decrease in income leads to the following changes: 

(1) a 4% increase in the quantity demanded of Muni bus rides.
(2) a 3% decrease in the quantity demanded of marijuana.
(3) a 13% decrease in the quantity demanded of San Francisco Giants tickets.

1. The income elasticity of San Francisco Giants tickets is _______.

A. 2.6

B. 1.67

C. 0.38

D. 0.6

E. -0.6

F. -2.6


Answer Key: A

2. Based on the information above, Muni bus rides are considered a(n) ________ and marijuana is considered a(n) _______.

A. inferior good; normal good

B. normal good; inferior good

C. normal good; normal good

D. inferior good; inferior good


Answer Key: A

3. Based on the information above, which of the following goods is most likely to be considered a luxury good?

A. San Francisco Giants tickets

B. marijuana

C. Muni bus rides


Answer Key: A