Which of the following is a macroeconomic question?
A. Should we have a constitutional amendment requiring the government to implement a national consumption tax to replace the current income tax?
B. Why did a leading computer manufacturer establish call centers in India?
C. Why does a pharmaceutical manufacturer try to lower its production costs?
D. Should the government put a tax on alcohol in an attempt to assist in the funding of support groups like Alcoholics Anonymous?
Answer: A
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There is no deadweight loss if the regulatory rule for a natural monopoly
A) is an average cost pricing rule. B) sets price at a level that enables the regulated firm to earn a specified rate of return on its capital. C) is a marginal cost pricing rule. D) prevents the firm from engaging in any form of price discrimination.
One disadvantage of a floating exchange rate system compared to a fixed or managed float exchange rate system is
A) it does not allow the exchange rate to reflect demand and supply in the market. B) it is difficult to maintain. C) it can worsen inflation if domestic prices of imports rise quickly. D) it eliminates the possibility of depreciation during a recession.
The interest rate effect helps explain why a lower price level will reduce the quantity of real goods and services demanded as an economy moves down along its aggregate demand curve
a. True b. False Indicate whether the statement is true or false
When the Fed decreases the discount rate, it makes it easier for banks
a. to decrease their reserves by borrowing from the Fed, causing the money supply to shrink b. to increase their reserves by borrowing from the Fed, causing the money supply to grow c. to protect against the inevitable accompanying increase in the legal reserve requirement d. to convert its loans into deposits e. to write off its obligations to the Fed