When a country suffers from a speculative attack:
A. the supply of currency available shifts right.
B. it lowers the equilibrium exchange rate.
C. it forces the government to spend its reserves to defend its fixed exchange rate.
D. All of these statements are true.
D. All of these statements are true.
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Everything else held constant, in the market for reserves, when the federal funds rate is 5%, lowering the discount rate from 5% to 4%
A) lowers the federal funds rate. B) raises the federal funds rate. C) has no effect on the federal funds rate. D) has an indeterminate effect on the federal funds rate.
The assignment of inputs to specific industries by central planners is made difficult by
A. the interdependency among industries. B. lack of data for decision making. C. the danger of a chain reaction among industries if an error is made at any point. D. All of the responses are correct.
A monopolist in the radio industry has two radio-making plants. The marginal cost of radio production by Plant A is $4Q (where Q is the number of radios produced) and the marginal cost of radio production by Plant B is always $16. If the demand curve for radios is downward sloping, the monopolist will
A. never produce radios at Plant A. B. always produce four times as many radios at Plant B as at A. C. never produce more than four radios at Plant A. D. produce radios at Plant A only as a last resort.
How do critics of discretionary stabilization policy view frequent changes in spending and tax policy?
a. The changes make the economy smoother, although it may not look that way to individual firms. b. The changes make life more difficult and hectic for Congress and the Fed. c. The changes smooth out the business cycle, making planning easier. d. The changes cause more instability in the economy and make planning more difficult.