When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand
B. increase; raise; decline
C. decline; lower; decline
D. decline; raise; decline
Answer: B
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If a Fed __________ other than bank reserves falls and there are no offsetting entries elsewhere on the Fed's balance sheet, then bank reserves must __________
A) asset; fall B) asset; rise C) liability; fall D) liability; rise
Suppose U.S.-produced wheat costs $5 per bushel and the exchange rate is 100 yen = $1 . If the exchange rate changes to 90 yen = $1, the
a. wheat would now cost more dollars. b. wheat would now cost the Japanese citizen less yen. c. wheat would now cost less dollars. d. wheat would now cost the Japanese citizen more yen. e. yen has depreciated in value.
Answer the following statement(s) true (T) or false (F)
1. Welfare effects are the gains and losses associated with government intervention in markets 2. Without a tax, tax revenues are zero. 3. When a tax gets larger, deadweight loss gets much smaller. 4. Other things being equal, the more elastic the demand or the supply curve, the smaller the eadweight loss. 5. The Law of Increasing Opportunity Cost refers to the condition where the opportunity cost of producing additional units of a good rises as society produces more of that good
Economies of scale imply that within some range one can increase the size of operation and:
A. total cost will decrease. B. fixed cost will decrease. C. average total cost will decrease. D. average total cost will increase.