A balance sheet for the central bank of Pecunia is shown below: Central Bank Balance Sheet Assets Liabilities Foreign assets $1,000 Deposits held by private banks $500 Domestic assets $1,500 Currency in circulation $2,000 Please write the
new balance sheet if the bank sells $100 worth of foreign bonds for domestic currency.
Central Bank Balance Sheet
Assets Liabilities
Foreign assets $900 Deposits held by private banks $500
Domestic assets $1,500 Currency in circulation $1,900
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
The rate at which units of one product can be exchanged for units of another product is called the terms of trade
Indicate whether the statement is true or false
The economic theory of government predicts elected officials at the federal level will have incentives to act in ways that
A) cause inflation. B) increase uncertainty and the instability of total demand. C) secure short-term economic gains with deferred costs. D) result in all of the above. E) result in none of the above because they will usually want to be reelected.
Economists have long debated whether there is a significant loss of well-being to society in markets that are monopolistically competitive rather than perfectly competitive
Which of the following offers the best reason why some economists believe that monopolistically competitive markets are less efficient than perfectly competitive markets? A) In contrast to perfectly competitive markets, firms in monopolistically competitive markets can charge a price greater than average total cost in the short run. B) In contrast to perfectly competitive markets, firms in monopolistically competitive markets do not produce where price equals average total cost in long-run equilibrium. C) In contrast to perfectly competitive markets, neither allocative efficiency nor productive efficiency are achieved in monopolistically competitive markets. D) In contrast to perfectly competitive markets, firms in monopolistically competitive markets earn economic profits in long-run equilibrium.