5. Other things the same, automatic stabilizers tend to
(A) raise expenditures during expansions and recessions.
(B) lower expenditures during expansions and recessions.
(C) raise expenditures during recessions and lower expenditures during expansions.
(D) raise expenditures during expansions and lower expenditures during recessions.

6. Suppose the economy is in long-run equilibrium. If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers, then in the short run, (A) real GDP will rise and the price level might rise, fall, or stay the same. In the long-run, real GDP will rise and the price level might rise, fall, or stay the same. (B) the price level will fall, and real GDP might rise, fall, or stay the same. In the long-run, real GDP and the price level will be unaffected. (C) the price level will rise, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall. (D) the price level will fall, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall.

7. GDP is not a perfect measure of well-being; for example, (A) GDP excludes the value of volunteer work. (B) GDP does not address the distribution of income. (C) GDP does not address environmental quality. (D) All of the above are correct.

8. A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth. The first is to increase barriers to trade. The second is to restrict foreign portfolio investment. Which of these policies would most economist think would promote growth? (A) both the first and the second (B) the first but not the second (C) the second but not the first (D) neither the first nor the second

9. Other things the same, if the price level rises, people (A) increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. (B) increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. (C) decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. (D) decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases.

10. The phenomenon of crowding-out suggests that the positive impact of budget deficits on economic activity are reduced by  _______ .(A) the impact produced by government spending on the environment. (B) an increase in national savings. (C) the interest rate effects associated with federal deficits. (D) the increase in pork barrel projects deficit spending entails.

11. In an economy open to international trade where the interest rate at which saving and investment would be equal is the world real interest rate _______ . (A) above; a trade surplus ensues (B) below; a trade deficit ensues (C) above; there is a net capital outflow (D) below; there is a net capital inflow E) none of the above

12. Which of the following is (are) likely to cause the marginal product of an input to decrease? (A) an increase in the real price of the input (B) a decrease in the quantity of the input used in production (C) technological advances (D) all of the above E) none of the above

13. If Figure 1 above is to show the result of a "fully accommodating" monetary policy following a shift of the IS curve from IS0 to IS1, what is the initial level of real income and interest rate before these changes? (A) 3500; 7.5%. (B) 4500; 12.5%. (C) 5500; 7.5%. (D) 4500; 2.5%.

14. In Figure 2 above, expansionary fiscal policy accommodated by the Fed can be pictured as a movement from points (A) A to D. (B) A to C. (C) D to B. (D) B to D. (E) A to B.

15. In Figure 3 above, an increase in autonomous exports will cause the ______ dollars to ______ and the exchange rate to ______, ceteris paribus. (A) supply of; shift to S1; rise (B) supply of; shift to S1; fall (C) demand for; shift to D1; fall (D) demand for; shift to D2; fall

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