Suppose the Fed permanently increases the money supply by a given amount. Which of the following is most likely to occur in the long run as a result of this monetary policy action?
A. a reduction in the real interest rate
B. an increase in employment
C. a decrease in unemployment
D. none of these
Answer: D
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One disadvantage of a fixed exchange rate system compared to a floating or managed float exchange rate system is
A) it more difficult for central banks to control inflation. B) it does not allow for government intervention. C) it can worsen inflation if domestic prices of imports rise quickly. D) it eliminates the possibility of depreciation during a recession.
A pizza shop owner needs to buy a new pizza oven and he is trying to decide between two different used ones. Whichever oven he buys, it will generate $3,000 net revenue per year. The older use oven has a useful life of only 2 years and the newer oven has a useful life of 4 years. If the interest rate is 8% per year, what is the difference in value between the two ovens? (Assume that each year's
revenue is received at the end of the year.) a. $4,586.58 b. $5,349.79 c. $2,205.09 d. $2,777.78 e. $3,000
According to the Weber-Fechner law, when the change in a stimulus is large in proportion to the original stimulus, the perceived size of the change will be:
A. large. B. zero. C. small. D. impossible to determine.
Consumption = $1,000; investment = $200; net exports = -$50; taxes = $230; private saving = $225; and national saving = $150. Refer to Scenario 26-3. For this economy, government purchases amount to
a. $330. b. $280. c. $305. d. $310.