Answered>Order 2169

1.

When the price level in Australia drops, Australian net exports will _______, because of the ________.

decrease; interest rate effect

increase; interest rate effect

increase; international trade effect.

decrease; international trade effect

2.

The velocity of money is constant and the price level in the Quantity Theory of Money is measured by GDP deflator. If money supply growth rate is 3%, then which of the following scenarios is consistent with Quantity Theory of Money ?

Real GDP growth is 3% and inflation is 3%.

Nominal GDP growth rate is 3% and inflation is 3%.

Real GDP is unchanged and inflation is -3%.

None of the above.