1. If the USA experiences an economic boom relative to its trading partners, then:

a. the supply of US dollar in the market increases

b. the US dollar depreciates

c. both A & B

2. If foreign countries increase their interest rates, then?

a. the US dollar will appreciate

b. the US dollar will depreciate

c. the US dollar will remain unaffected

3. If China , a key trading partner of the USA, expericnes a recession, then

a. US net exports to China will increase

b. US net exports to China will decrease

c. US net exports to Chine will remain unaffected

4. Suppose the Government of the USA decided to increases it's spending over next one year. How will this expansionary fiscal policy affect the US economy?

a. output, interest rates, and prices will incrase but net exports will decrease

b. output and interest rates will increase but prices and net exports will decrease

c. all four variables will increase

d. output will increase but interest rates , prices and net exports will decrease

5. With everything else being equal, which of the following statement is true about money supply and reserve ratio?

a. if the central bank increases the reserve ratio, then money supply increases

b. if the central bank decreaes the reserve ratio, then money supple increases

c. there is no relationship between reserve ratio and money supply

d. none of the above

6. The deficit is :

a. the amount by which the government purchases, transfers, and net interest exceed tax revenues

b. the amount by which government purchases and transfers exceeds tax revenues

c. the primary deficit minus net interest payments

d. total tax revenues minus net interest minus government expenditures