If a Mexican pension fund decides to purchase U.S. government bonds, what is the effect in the foreign-exchange market?
A. It will increase demand for U.S. dollars.
B. It will decrease demand for U.S. dollars.
C. It will increase supply of U.S. dollars.
D. It will decrease supply of U.S. dollars.
Answer: A
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Use the following graphs to answer the next question.
In the graphs, the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the level of investment spending associated with each curve. All figures are in billions. The economy is at point Y on the investment demand curve. Given these conditions, what policy should the Fed pursue to achieve a noninflationary, full-employment level of real GDP?
A. Increase aggregate demand from AD3 to AD2. B. Increase interest rates from 4% to 8%. C. Decrease the money supply from $225 billion to $150 billion. D. Make no change in monetary policy.
Why wasn't everyone else already implementing group responsibility to lend to the poor in the example in the text?
A. Governments of poor countries had regulations against group responsibility. B. The idea was genuinely new. C. It was not profitable. D. It was easy for groups to provide false social security numbers for members that did not exist.
Which of the following most clearly illustrates the concept of derived demand?
a. An increase in the price of steak causes the demand for poultry to increase. b. An increase in the demand for new houses leads to an increase in the demand for construction workers. c. An increase in consumer income leads to an increase in the demand for services provided by the government. d. An increase in the demand for new cars causes the demand for used automobiles to rise.
A crucial difference between the impact of an import quota compared to a tariff is that:
A. import quotas generate revenue to the domestic government, but tariffs do not. B. import quotas generate no revenue to the domestic government, but tariffs do. C. tariffs increase the prices paid by domestic consumers, but quotas do not. D. both (a) and (c)