I8S-ECON103 Version B 11 . Which of the following events could cage inflation in
ID: 1132371 • Letter: I
Question
I8S-ECON103 Version B 11 . Which of the following events could cage inflation in the US, a country that uses flat moncy? a The government decides to print more money b Individuals are frustrated by the infrequent occurrence of the double coincidence of There has been a decision made to switch from a currency based on the amount of gold (a scarce metal) so a currency based on the amount of silver (a plentiful metal). e. d. The govermment decides to transition to a commodity backed money e. There is a discovery of a new silver mine. 12. Frictional unemployment is present in an economy because a. workers take time to decide which jobs are best for them. b there are often changes in the industrial makeup of an economy e. the unemployment rate is too low d. firms oten lay off workers due to economie recession. e. workers ofen need to update their skills. Which combination of events could have caused the equilabrium interest rate to rise and the equilsbrium quantity of loanable funds (both boerowed and lent) to fal1? a. People become more focused on the future, and govenments run larger defieits. b. A baby boom begins, and investor confidence falls c. A baby boom begins, and people become less focused on the future d. People have lower time preferences, and capital is more productive e. A baby boom begins, and investor confidence rises. 13. 14. If the interest rate on a loan is higher than the expected return from an investment, a the Federal Reserve will conduct contractionary monetary policy. b a rational firm will not take out a loan for the investment c. a rational firm will take out a loan for the investment d. the Federal Reserve will conduct expansionary monetary policy e the government will conduct expansionary fiscal policy Table 1. Consider the following data, which shows the quantities and prices of two goods produced in the economy Quantity produced I million Price Steak dinner $20 Refer to Table I. Assuming steak dinners and fidget spinners are the only two goods produced in the economy, what is the value of the gross domestic product (GDP)? a. $30 million b. $5 million c. $10 million 15. d. $22 million e. $20 million 16. Suppose a hurricane destroys 20 percent of the capital stock in a country. In the long run, output will and the price level will a. b. c. remain unchanged; remain unchanged decrease; increase remain unchanged; increase d. e. decrease; decrease decrease; remain unchanged Page 3 /11Explanation / Answer
11)
Right answer is : (A)
Validity behind the fiat money is government order. Usually, such currencies are not supported by any collateral or base.
Printing extra money increases supply of money in market which frequently leads to rise in price level or inflation.
12)
Frictional unemployment is witnessed where workers take time to find new jobs. Time period between resignation and finding new job, workers remain unemployed, it is called frictional unemployment.
Right answer is : (A)