The government establishes the rules of the game for economic transactions in order to
A. Encourage spillover costs.
B. Discourage the ownership of property.
C. Legitimatize and enforce contracts.
D. Discourage the production of capital.
Answer: C
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Which of the following happens during a recession?
A) Labor demand increases. B) The equilibrium wage rate rises. C) Labor supply falls. D) The equilibrium wage rate falls.
Individuals who are more risk averse
a. buy less insurance b. buy more insurance c. are not more or less inclined to buy insurance d. are philosophically opposed to insurance
A sign that Country A is under pressure to devalue its currency is its:
a. Overall balance is in surplus. b. Financialaccount is in deficit. c. Overall balance is in deficit. d. Reserves account is in deficit (i.e., negative). e. All of the above.
How does conventional monetary policy work?
A. Fed selects target rate, uses OMO to change supply of reserves, and changes money supply to move to target B. changes supply of bank reserves through OMO, changes price of reserves, Fed Funds rate changes other interest rates C. changes money supply through OMO, changes Fed Funds rate D. all of the above