The appropriate “medicine” for correcting payments imbalances under a fixed exchange rate system is
A. inflation for deficit countries and recessions for surplus countries.
B. no change for surplus countries and tax cuts for deficit countries.
C. inflation for surplus countries and recessions for deficit countries.
D. sales of gold for deficit countries and revaluations for surplus countries.
Answer: C
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What was the largest and most important economic event of the 1900s?
a. The terrorist attacks of 9/11. b. Ronald Reagan's tax cuts. c. The Great Depression. d. The inflation of the 1970s.
Citizens Bank confronts a reserve requirement of 20 percent and currently holds millions of dollars in excess reserves. If a depositor withdraws $35,000 . the excess reserves of the bank will
a. decline by $7,000. b. decline by $35,000. c. decline by $28,000. d. increase by $7,000.
The wealth or real balances effect indicates that
A. a higher interest rate will increase the real value of many financial assets and therefore cause an increase is spending. B. a higher interest rate will decrease the real value of many financial assets and therefore cause a decline in spending. C. an increase in the price level will increase the demand for money, increase interest rates, and reduce consumption and increase spending. D. a lower interest rate will increase the real value of many financial assets and therefore cause an increase in spending.
Marginal revenue product measures the:
A. amount by which the extra production of one more worker increases a firm's total revenue. B. decline in product price that a firm must accept to sell the extra output of one more worker. C. increase in total resource cost resulting from the hire of one extra unit of a resource. D. increase in total revenue resulting from the production of one more unit of a product.