If the central bank expands the money supply under floating exchange rates, it potentially stimulates the economy in two ways, namely:
A) by raising the price level and by increased competition.
B) by lowering the rate of interest and by causing a depreciation of the currency.
C) by creating higher spending and by increasing the budget deficit.
D) by increasing worker productivity and creating R&D incentives for firms.
Answer: B) by lowering the rate of interest and by causing a depreciation of the currency.
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Let D= demand, S = supply, P = equilibrium price, and Q= equilibrium quantity. What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?
A) D no change, S decreases, P increases, Q increases. B) D decreases, S no change, P and Q decrease. C) S decreases, D no change, P increases, Q decreases. D) D and S decrease, P and Q increase.
A characteristic of the long run that is not available in the short run is that a firm is free to vary its output
Indicate whether the statement is true or false
Which of the following bond ratings by Moody's Investors Service would NOT be considered to be below investment grade?
A) Baa B) Ba C) B D) All of these ratings are considered below investment grade.
Under comprehensive health insurance the level of output is determined where _____
a. supply equals demand b. demand equals zero c. supply is of unitary elasticity d. the insurer sets it