List the drawbacks of the gold standard
What will be an ideal response?
1. Undesirable constraints on the use of monetary policy to fight unemployment.
2. A stable overall price level is achieved only if the relative price of gold and all other goods and services is stable.
3. A central bank cannot increase holdings of international reserves as its economy grows unless new gold is discovered.
4. Unfair advantage to gold-producing nations.
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Games:
A. only have one outcome possible. B. with noncooperative equilibriums are always negative-negative outcomes. C. may have several stable outcomes. D. must have a dominant strategy present to reach a stable equilibrium.
Prohibiting price increases in situations of true scarcity
A. prevents the market mechanism from reallocating resources more efficiently. B. discourages production. C. may lead to extreme shortages of vitally needed products. D. All of the responses are correct.
Special interest group Z receives a 1/200th slice of the economic pie. Its net benefit from both an economic growth policy and a transfer policy is $30,000. How much does the size of the economic pie (Real GDP) need to grow before group Z is indifferent between the two policies?
A) $150 B) $600,000 C) $600,000,000 D) $6,000,000 E) none of the above
If everyone knew in advance the exact rate of inflation:
A. the economy will have reached its long run equilibrium. B. borrowers would be discouraged when inflation will be low and lenders when inflation will be high. C. the risk of the breakdown of financial intermediation would increase. D. the exact rate of inflation wouldn't matter so much because people could prepare.