Question

Question 15 (3 points)

Suppose the labor force increases due to immigration. Using the models of Chapter 3, determine the effect on GDP and the real interest rate.

a	GDP increases, the real interest rate falls.
b	GDP increases, the real interest rate increases.
c	GDP increases, the real interest rate does not change.
d	GDP does not change, the real interest rate increases.
e	GDP does not change, and the real interest rate also does not change.

Question 16 (3 points)

You need to purchase a particular economics textbook for a course next semester. You want to get the best price, so you compare the prices charged by the campus bookstore, Amazon.com, and other textbook sellers. This only takes a few minutes, and you end up saving $30.

This story illustrates which of the following functions of money?

a	asset of investment
b	unit of account
c	store of value
d	medium of exchange

Question 17 (3 points)

Here is the balance sheet for ABC Bank:

assets	liabilities & capital
reserves $100	deposits $600
loans $500	debt/borrowings $200
securities $400	capital ?

How much capital does ABC Bank have?

a	$100
b	$200
c	$400
d	$600
e	$1000

Answer 1

Ans 1) GDP increases, the real interest rate increases.

because the gain in GDP per capita combines with internet fiscal advantage of migration to steer to an increase in household consumption. Real intrest rate are increase due to inflation.

Ans 2) medium of exchange

because here money is the medium of the exchange betweens buyers and sellers.

Ans 3) $200

because In balance sheet both side are equal assets and liabilities.

Assets	Liabilities
reserves $100	deposits $600
loans $500	debt/borrowings $200
securities $400	capital $200