An overvalued currency can be maintained:
A. even in the face of prolonged speculative attacks.
B. only until international reserves are exhausted.
C. as long as the government is willing to defend the currency.
D. indefinitely.
Answer: B
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
Answer the following statement(s) true (T) or false (F)
1. Distributing goods equally among consumers would be not only fair but efficient. 2. A market price contains no more information about a good than a good social planner would be able to obtain. 3. According to F.A. Hayek, knowledge is lost as statistics are used to convey information. 4. Whether a good is distributed by a social planner or a market system, the area beneath the demand curve out to the quantity available accurately measures the value consumers receive. 5. When allocation decision are not made on the basis of price traditional methods of social gain understate the actual gain to society.
Katie buys a house for $200,000 and rents it for $1,000 per month. Katie's annual rate of return:
A. is 0.5 percent. B. is 5 percent. C. is 6 percent. D. cannot be determined until she sells the house.
Assume that an economy has 2000 workers, each working 3000 hours per year. The average real output per worker-hour is $10. What will the total output or real GDP be? Explain.
What will be an ideal response?