An international trade shock arising from a sudden increase in import demand is likely to be least disruptive to a country with
A. a floating exchange-rate system.
B. a fixed exchange-rate system with sterilization.
C. a surplus in the overall payment balance.
D. a fixed exchange-rate system without sterilization.
Answer: A
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The vertical axis of a graph that shows a market supply curve indicates the
A. various quantities of output at which the market will be cleared. B. cost of the amount of output produced. C. number of sellers who are in the market for this product. D. prices at which firms would be willing and able to sell their different products.
Isoquants that are downward-sloping straight lines exhibit
A) an increasing marginal rate of technical substitution. B) a decreasing marginal rate of technical substitution. C) a constant marginal rate of technical substitution. D) a marginal rate of technical substitution that cannot be determined.
Widespread acceptance of the Keynesian theory of fiscal policy
a. caused most economists to reject the public choice view of budget deficits. b. relaxed the political pressure to balance the budget and, hence, paved the way for the persistent budget deficits of the last five decades. c. was based on the view that continual budget deficits would help stabilize the economy. d. increased the pressure for a constitutional amendment mandating that the federal government balance its budget.
The law of supply states that price and quantity supplied are
A) inversely related, ceteris paribus. B) directly related, ceteris paribus. C) not related. D) fixed.