Free Response Quiz 2

Free Response Quiz 2

1.       What 2 factors of the economy does the Phillips curve correlate?

2.       What would be the real interest rate if the nominal interest is 12% and the expected Inflation is 7% and the unemployment rate is 6%?

3.       What would be the real interest rate if unemployment is 8% the nominal interest is 6% and the expected Inflation is 4%?

4.       What is the difference between Nominal Interest and Real Interest?

5.       If the inflation rate were 2% what are the actions that the Federal Reserve can take to target 3% inflation.

a.       Why would they want to do that?

6.       If the inflation rate is 5% what actions can Congress take to target 4% inflation?

a.       Why would they want to do that?

7.       If the inflation rate were 1% what Fiscal Policy actions can be taken to target 3% inflation?

a.       Why would they want to do that?

8.       If the inflation rate were 9% what Monetary Policy actions can be taken to target 5% inflation?

a.       Why would they want to do that?

9.        How would Expansionary Fiscal Policy affect Aggregate Demand?

10.   How would Contractionary Monetary Policy affect Short Run Aggregate Supply?

11.   How would Expansionary Monetary Policy affect real GDP?

12.   What are the effects of a Depreciating currency to a country’s GDP?

13.   What are the Effects of an Appreciating Currency to a country’s Exports?

14.   If the US demands products from France where the Euro is traded, what will happen to value of the US Dollar?

15.   If the US demands products from Germany where the Euro is traded, what will happen to value of the Euro?

16.   What will happen to the value of the Canadian Dollar if Mexican National s start vacationing in Calgary, Toronto, and Vancouver?

a.       How does this increase in tourism in Canada affect Canadian exports?

b.      How does this increase in tourism in Canada affect US Currency?

c.       How does this increase in tourism affect Mexico’s GDP?