The buying and selling of foreign currency by the central bank is a trade policy whose objective is:
A. reducing purchases of assets abroad.
B. stabilizing the exchange rate against external shocks.
C. stabilizing the interest rate against foreign capital outflows.
D. promoting long term economic growth.
Answer: B
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Full employment is the level of unemployment that occurs
A) when everyone looking for a job has a job. B) when cyclical unemployment is zero. C) when frictional and structural unemployment are zero. D) when frictional, structural, and cyclical unemployment are zero. E) None of the above answers is correct.
The most common type of investment in human capital is
A) having more children per family. B) the migration of labor in search of better jobs. C) expanded years of schooling. D) improved health care and maintenance.
In the long run, if the prices of goods and services are higher than before the aggregate quantity:
A. supplied will be higher. B. demanded will be lower. C. supplied will not change. D. demanded will be higher.
Refer to the graph below. Assume that the economy is in initial equilibrium where AD1 intersects AS1. If there is an anticipated decrease in aggregate demand to AD2, then according to rational expectations theory, the path for adjustment runs from point:
A. A to B to C
B. A to D to C
C. A directly to C
D. A directly to D