9. which of the following is a cost of inflation?
a) shoe leather costs
b) relative price variability
c) menu costs
d) all of the above are correct

13. higher saving is associated with
a) higher standard of living but not a larger capital stock
b) larger capital stock and a higher standard of living
c) a larger capital stock bug not a higher standard of living
d) neither a higher standard of living nor a higher capital stock

14. in the aggregate demand and aggregate supply model, sticky wages, sticky prices, and misperceptions about relative prices
a) explain why the aggregate demand curve is downward sloping
b) have permanent effects
c) explain why the short run aggregate supply curve shifts over time
d) explain monetary neutrality

15. if the real exchange rate between the u. s. and argentina is 1, then
a) purchasing-power parity holds, and 1 u. s. dollar buys 1 argentinian bolivar
b) purchasing-power parity holds, and the amount of dollars needed to buy goods in the u. s. is the same as the amount needed to buy enough argentinian bolivars to buy the same goods in argentina.
c) purchasing-power partly does not hold, but 1 u. s. dollar buys 1 argentinean bolivar.
d) purchasing-power parity does not hold, but the amount of dollars needed to buy goods in the u. s. is the same as the amount needed to buy enough argentinean bolivars to buy the same goods in argentina.

16. suppose banks desire to hold no excess reserves and that the fed has set a reserve requirement of 6%. if you deposit $8,000 into the first raven bank,
a) first raven's assists and liabilities both will increase by $8,000
b) first raven's will be able to lend out $7,520
c) first raven's required reserves increase by $480
d) all of the above are correct

18. according to the theory of liquidity preference, a given increase in the money supply will reduce interest rates
a) by a smaller amount when interest rates are high than when they are low
b) an increase in the money supply won't reduce interest rates, it will increase them
c) by a smaller amount when interest rates are low than when they are high
d) by the same amount regardless of whether interest rates are high or low.

19. if, after a period when actual inflation has been 5% and expected inflation has been 5%, people correctly anticipate that inflation will fall by 1% then
a) the short-run phillips curve shifts left and unemployment is unchanged
b) the short-run phillips curve shifts right and unemployment rises
c) the short-run phillips curve would shift left and unemployment falls
d) the short-run phillips curve shifts right and unemployment is uncharged

21. the short-run phillips curve can be shifted by
a) supply shocks but not a change in inflation expectations
b) a change in inflation expectations but not supply shocks
c) neither a change in inflation expectations nor supply shocks
d) both a change in inflation expectations and supply shocks

22. which of the following policies would be advocated by someone who wants the government to follow an active stabilization policy when the economy is experiencing severe unemployment?
a) increase government expenditures
b) decrease the money supply
c) increase taxes
d) all of the above are correct

23. which of the following is an example of menu costs?
a) advertising new prices
b) deciding on and calculating new prices
c) printing new price lists
d) all of the above are examples of menu costs

24. when aggregate demand shifts rightward along the short-run aggregate-supply curve, inflation
a) increases and unemployment increases
b) decreases and unemployment increases
c) decreases and unemployment decreases
d) increases and unemployment decreases

25. when inflation rises, people will desire to hold
a) less money and will go to the bank more frequently
b) more money and will go to the bank less frequently
c) less money and will go to the bank less frequently
d) more money and will go to the bank more frequently

26. when the actual inflation rate is lower than the expected inflation rate
a) the unemployment rate is lower than the natural rate
b) the natural rate of unemployment rises
c) the natural rate of unemployment falls
d) the unemployment rate is higher than the natural rate