7. Choose the correct statement(s) about the Phillips curve from the options below.
(A) If inflation expectations rise, the short-run Phillips curve shifts right, so that at any inflation rate unemployment is higher in the short run than before.
(B) A policy that lowered the natural rate of unemployment would shift both the short-run and the long-run Phillips curves to the left.
(C) An improved functioning of the labor markets will shift both the long-run Phillips curve and the long-run aggregate supply curve to the right.
(D) A change in expected inflation shifts the short-run Phillips curve, but not the long run Phillips curve.

8. Suppose that a country's currency depreciates significantly in the foreign exchange market. Which of the following outcome(s) are likely to result from this depreciation? (A) The country's exports become more competitive internationally, leading to an increase in aggregate demand and real GDP. (B) The overall price level in the country is likely to decrease as a result of the depreciation. (C) Foreign investors are more likely to invest in the country's assets due to the depreciation of the currency. (D) The depreciation may lead to inflationary pressures within the country as the cost of imported goods rises.

9. Choose the likely illustration(s) of the time inconsistency of policy among the follows. (A) A company decides to invest in new technology based on a long-term strategy to improve productivity. (B) When people expect that inflation will be low, it is harder for the Fed to increase output by increasing the money supply. (C) A government reduces taxes during a recession to stimulate the economy, following its long-term fiscal policy. (D) A central bank commits to a low inflation target but later increases the money supply to boost short-term employment before an election, leading to higher inflation.

10. Consider the open-economy macroeconomic model. Suppose a country experiences a significant increase in its government budget deficit. Which of the following outcome(s) are most likely to occur as a result? (A) The net capital outflow increases, leading to a depreciation of the country's currency. (B) The net capital outflow increases, leading to a depreciation of the country's currency. (C) The trade balance worsens due to a decrease in net exports. (D) The real interest rate rises, leading to a decrease in domestic investment.

11. A manufacturing firm produces gadgets and incurs fixed costs of $2000 and variable costs of $3000 for producing 100 units. The firm decides to increase production to 150 units, which increases the total variable costs to $4500. Choose the correct statement(s) about the firm's production costs from the following: (A) The average total cost per unit decreases as production increases from 100 to 150 units. (B) The average variable cost per unit remains constant as production increases from 100 to 150 units. (C) The total cost of producing 150 units is $6500. (D) The marginal cost of producing the 150th unit is $30.

12. Consider the concept of interest rate parity (IRP) for the association between interest rate differences and exchange rates. Which of the following statement(s) correctly illustrate the principle of interest rate parity? (A) If Country A's interest rate is 5% and Country B's interest rate is 3%, the forward exchange rate should predict a 2% depreciation of Country A's currency relative to Country B's currency. (B) If investors expect the currency of Country A to appreciate, the interest rate in Country A must be lower than in Country B to maintain interest rate parity. (C) Interest rate parity ensures that there are no arbitrage opportunities arising from differences in interest rates between two countries. (D) Interest rate parity implies that the difference in interest rates between two countries is equal to the expected change in exchange rates between their currencies.

13. Consider a banking system with the following characteristics: the reserve requirement is 8%, banks initially hold no excess reserves, and the public holds no currency, only deposits. If the central bank implements a policy change and certain events occur, which statement (s) of the follows are true? (A) If a depositor withdraws $400 from their bank account, the banking system's reserves will decrease by $32. (B) The money multiplier in this system is 12.5. (C) An increase in the reserve requirement to 10% will decrease the money multiplier to 10. (D) If banks decide to hold 4% of their deposits as excess reserves in addition to the reserve requirement, the money multiplier will decrease to 6.67.

14. The Affordable Care Act (ACA), also known as "Obamacare," introduced several key changes to the U.S. healthcare system. Choose the right provision(s) included in the ACA. (A) It required employers to provide free health insurance to all employees. (B) It mandated that insurance companies cannot deny coverage based on pre-existing conditions. (C) It required all Americans to purchase health insurance or face a financial penalty. (D) It allowed health insurance companies to deny coverage to individuals with pre-existing conditions.

15. When Amy's income increased from $15,000 to $30,000, her consumption of macaroni decreased from 12 pounds to 6 pounds, and her consumption of soy-burgers increased from 3 pounds to 6 pounds. Using the midpoint method, we can conclude that: (A) Macaroni and soy-burgers are both normal goods with income elasticities greater than \( 1/2 \). (B) Macaroni is an inferior good and soy-burgers are normal goods; both have income elasticities greater than \( 1/2 \). (C) Macaroni is an inferior good with an income elasticity less than \( 1/2 \) and soy-burgers are normal goods with an income elasticity greater than \( 1/2 \). (D) Macaroni and soy-burgers are both inferior goods with income elasticities less than \( 1/2 \).

16. Regarding the behavior of firms in an oligopoly, which of the following statement(s) are correct? (A) Oligopolistic firms may engage in tacit collusion, where they implicitly agree to maintain higher prices without explicit communication. (B) When firms in an oligopoly collude, they act as a monopoly and maximize total industry profits. (C) The kinked-demand curve model suggests that oligopolistic firms face a demand curve that is more elastic for price increases than for price decreases. (D) In a Cournot duopoly, each firm determines its profit-maximizing output level assuming the output of the other firm is fixed.

17. According to liquidity preference theory, the money-supply curve would shift leftward (A) if the money demand curve shifted left. (B) if the Federal Reserve chose to decrease the money supply. (C) if the interest rate decreased. (D) if the price level decreased.

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