(01.02 MC) Suppose the PPC of a producer producing two goods, A and B, is a straight line. Which of the following is true regarding the opportunity cost for the producer?

(06.01–06.06 HC) Country Alpha and Country Beta are trading partners each with a current account balance of zero. Country Alpha’s currency is the dollar, and Country Beta’s currency is the euro. If inflation in Country Alpha increases while Country Beta’s price level stays flat, will it result in a current account deficit, surplus, or no change for Country Alpha? Explain. Draw a graph of the foreign exchange market for the dollar of Country Alpha. Illustrate the effect of the inflation change from part (a) on the value of its dollar compared to the euro of Country Beta. Now if tastes in Country Beta shift toward goods of Country Alpha, what will be the impact on the demand for the dollar of Country Alpha? Explain. Based on part (c), what will be the effect on the value of the dollar of Country Alpha compared to the euro of Country Beta?

(02.04 MC) If the CPI in Year 1 is 120 and in Year 2 is 130, then what impact will this have on the price level and cost of living for individuals?

(05.05 MC) The economy depicted in this data table is closed, with no international trade of any kind. Government spending $40 billion Government transfer payments $20 billion Tax revenues $40 billion Private savings $60 billion Business capital investments $60 billion Based on the data above, which of the following must be true?

(02.07 LC) At the current equilibrium real GDP, there is a recessionary output gap. Which of the following must be true?

(04.04 MC) Suppose an individual deposits $7,000 in a bank that has a reserve requirement of 20%. Assuming this is the only deposit in the bank, what is the liability and the excess reserve held by the bank?

(02.01 MC) Which of the following statements explains the difference between final goods and intermediate goods with regards to the GDP?

(04.06 MC) Suppose an economy has a money supply of $1,000 billion and a reserve requirement is 20%. What will be the amount of money supply in the economy if the central bank decides to buy $5 billion worth of government bonds in an open market operation, and banks hold no excess reserves?

(06.01–06.06 HC) Country X and Country Y are trading partners each with a current account balance of zero. Country X’s currency is the dollar, and Country Y’s currency is the peso. If interest rates in Country X increase, will the immediate consequence be a current account deficit, surplus, or no change for Country X? Explain. Draw a graph of the foreign exchange market for the dollar of Country X. Illustrate the effect of the increase in interest rates in Country X on the value of its dollar compared to the peso of Country Y. Now if Country Y enters a severe recession, what will be the impact on demand for the dollar of Country X? Explain. Based on part (c), what will be the effect on the value of the dollar of Country X compared to the peso of Country Y?

(02.01 LC) Which of the following is true regarding the circular flow model used to explain the GDP?