Question

1. Suppose Country ABC’s Nominal GDP is $3,189 and the money supply is $100. What is the percentage change of the velocity of money if Nominal GDP falls to $2,823 and the money supply falls to $83?

2.

exports and imports change due to

	a.	Relative growth rates between two economies
	b.	Relative prices between two economies
	c.	Change in the price of key inputs
	d.	Political considerations

QUESTION 4

1. Investment will change due to

	a.	Tax incentives for investment
	b.	Changes in Expectations about future economic growth
	c.	Creation of new technologies
	d.	Change in the price of key inputs

Answer 1

1)

Answer 2) Exports and imports changes due to relative prices between the two economies. If a domestic currency appreciates against foreign currency then there would be an increase in imports and if the domestic currency depreciates then there would be an increase in exports from domestic currency.

Hence option B is the correct answer.

3) The investment will change due to Changes in Expectations about future economic growth. If economic prospects improve, then firms will increase investment as they expect future demand to rise.

Hence option B is the correct answer.

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