The biggest disadvantage of a fixed exchange rate is the
A) increased probability of high inflation.
B) tradeoff between supporting the exchange rate and adjusting the trade balance.
C) tradeoff between supporting the exchange rate and maintaining economic growth.
D) tradeoff between supporting the exchange rate and maintaining a balanced budget.
C
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Raising the personal income tax rate rotates the consumption function ________ and ________ the tax-adjusted MPC
A) downward; raises B) upward; raises C) downward; lowers D) upward; lowers
All of the following affect the demand elasticity for labor EXCEPT
A) final product income elasticity. B) ease of substitution of labor for other inputs. C) final product price elasticity. D) labor costs as a portion of total cost.
Economies of scale occur where
a. long-run average cost falls as new firms enter the industry b. short-run average cost falls as new firms enter the industry c. long-run average cost falls as one firm expands plant size d. short-run average cost falls as one firm expands plant size e. long-run average cost rises as one firm expands plant size
The primary function of the World Bank is to:
a. lend money to the World Trade Organization. b. provide loans to countries experiencing huge budget deficit. c. finance economic development in poor countries. d. assist countries experiencing balance of payments deficits. e. finance the fiscal stabilization program of the U.S. government.