How were exchange rates determined under the gold standard? How did the Bretton Woods system differ from the gold standard?
What will be an ideal response?
Under the gold standard, exchange rates were determined by the relative amounts of gold in each country's currency. Both the gold standard and Bretton Woods systems were fixed exchange rate systems, but people were able to redeem paper currency for gold domestically only under the gold standard.
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Answer the following statements true (T) or false (F)
1. An increase in the money supply always causes an increase in the price level. 2. The effect of a change in the money supply on economic activity may be offset by a change in velocity. 3. An increase in the velocity of money can have an effect similar to that of an increase in the money supply. 4. A government surplus may trigger a decline in the money supply. 5. If the CPI reads 150, prices have increased 50 percent since the base year.
Which of the following is false?
A. Keynes believed that the economy was basically unstable. B. The classical economists believed that full employment was a "rare occurrence". C. Keynes argued that the expected rate of profit was the most important factor in determining the level of investment demand in an economy. D. The classical economists used the laws of supply and demand to prove the validity of Say's Law.
The U.S. tax-transfer system (as distinct from the tax system alone) is:
A. bimodal. B. progressive. C. proportional. D. regressive.
Refer to the information provided in Figure 3.12 below to answer the question(s) that follow.
Figure 3.12Refer to Figure 3.12. The supply curve for hula hoops shifts from S1 to S0. This could be caused by
A. a decrease in the number of firms selling hula hoops. B. a decrease in the cost of producing hula hoops. C. a decrease in the demand for hula hoops. D. a decrease in the price of hula hoops.