If the government regulates the market in the above figure in a way to achieve efficiency, then ________ tons of paper will be produced and consumed
A) 0
B) 100
C) 200
D) None of the above answers is correct.
B
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Assume a central bank follows a rule that requires it to take steps to keep the price level constant. If the price level fell because of a decrease in aggregate demand and an increase in aggregate supply that kept output unchanged, then
a. the central bank would have to raise interest rates which would decrease output. b. the central bank would have to raise interest rates which would increase output. c. the central bank would have to reduce interest rates which would decrease output. d. the central bank would have to reduce interest rates which would increase output.
Assume that policy makers are pursuing a fixed exchange rate regime and that the economy is initially operating at the natural level. Which of the following will occur as a result of a evaluation?
A) The real exchange rate will be permanently higher in the medium run. B) The real exchange rate will be permanently lower in the medium run. C) The effects of this devaluation on the real exchange rate will be ambiguous in the medium run. D) The nominal exchange rate will initially increase in the short run and then decrease in the medium run. E) none of the above