In a binding situation
A. the interest rate is always zero.
B. only changes in the Z factors change the interest rate.
C. only changes in the price level change the interest rate.
D. changes in both the price level and in the Z factors change the interest rate.
Answer: A
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Refer to the above table. Assuming that opportunity costs are constant, the opportunity cost of producing a bicycle in the United States is equal to ________, and the opportunity cost of producing a bicycle in Mexico is ________
A) 4 computers; 0.5 computer B) 0.25 computer; 2 computers C) 2.67 bicycles; 0.33 computers D) 0.375 computer; 3 bicycles
If the national debt rises to the debt ceiling and there is currently a budget ________, the Congress and the President must agree to ________ the debt ceiling or else the federal government will have insufficient funds to pay its bills and will be forced to shut down
a. surplus, lower b. deficit, raise c. surplus, lower d. none of the above
In the short run (specificfactors) model, what will happen to the rental rate on capital and the wage rate when there is FDI in the country?
a. Both the rental rate on capital and the wage rate will increase. b. Both the rental rate on capital and the wage rate will decrease. c. The rental rate on capital will increase and the wage rate will decrease. d. The rental rate on capital will decrease and the wage rate will increase.
To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.