An appreciation of a nation's currency is
A) a situation in which exchange rates are allowed to fluctuate in the open market in response to changes in supply and demand.
B) the increase in the exchange value of one nation's currency in terms of an other nation.
C) a nation in which households, firms, and governments buy and sell national currencies.
D) the decrease in the exchange value of one nation's currency in terms of another nation.
B
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The figure above shows a nation's consumption function. If disposable income is $4 trillion, then the MPC is ________ and saving is ________
A) negative; positive B) positive; positive C) positive; zero D) negative; negative E) positive; negative
Economists use the term "potential output" to refer to ________
A) a level of output that has not yet been achieved B) the maximum level of output of which an economy is capable C) the sum of finished goods plus goods in production that will be finished within the year D) the level of output that occurs when all prices are fully adjusted E) none of the above
Discretionary fiscal policy is best described as
A) a deliberate attempt to cause the economy to move to full employment and price stability more quickly than it might otherwise. B) a deliberate attempt to improve the functioning of free markets. C) an automatic change in income transfer payments to keep the economy at full employment. D) the design of a tax system that automatically stabilizes economic activity over time.
If the budget allocation for a government agency depends on the last period's spending alone, agency heads have a clear incentive to
A. not increase or decrease spending to keep their budget balanced. B. spend less money if that is the most efficient decision. C. spend more money even if it is done inefficiently. D. spend more money only if it is done efficiently.