Refer to above Table 2-2. The geometric average of the increase in real GDP between year 1 and year 2 is
A) 3.1%.
B) 3.2%.
C) 3.3%.
D) 3.8%.
D
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When Maria deposits $100 in currency in her checkable deposit at Bank of America, the immediate effect is that the quantity of M1
A) decreases. B) does not change. C) increases. D) changes, but the direction of the change depends on whether the deposit was accepted by a thrift institution or a commercial bank. E) changes only if Bank of America does not have excess reserves.
The Federal Reserve has just purchased bonds in the market, carrying out open market operations. In the short run in the Keynesian model, this would cause the foreign real interest rate to ________ and foreign output to ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
In the 1960s, government policy makers believed that they could: a. stabilize the economy by letting the market system solve all problems. b. reduce unemployment by running federal budget surpluses
c. eliminate government's role in stabilization policy. d. use changes in the money supply to virtually eliminate business cycles. e. use taxation and government spending to fine-tune the economy.
After a speculative attack has been successful, and a country is forced to devalue its currency, it is common to see many local business firms driven to bankruptcy. This most commonly occurs because _____
a. nobody ever wants to invest in a country that just suffered a devaluation b. many local firms took foreign loans (denominated in, say, dollars), and they cannot repay them at the new exchange rate c. the WTO forces troubled firms to show profits or make way for new, more efficient firms d. local firms cannot compete with their foreign competitors at the new prices after the devaluation e. many local firms do not know how to deal with the complicated financial operations involved in a speculative attack