An economy's standard of living grows over the long run because of:
a. better international competitiveness.
b. centralized planning and decision making.
c. increase in the amount and quality of resources.
d. stringent foreign trade policies.
c
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Refer to Game Matrix I. The only outcome in this game that is not Pareto optimal is
a. the upper left-hand corner.
b. the upper right-hand corner.
c. the lower left-hand corner.
d. the lower right-hand corner.
When the Fed raises the federal funds rate, the exchange rate ________ and net exports ________
A) increases; decreases B) does not change; decreases C) does not change; does not change D) decreases; decreases E) increases; increases
Most economists believe that substitution behavior by consumers causes inflation measured by the Consumer Price Index (CPI) to overstate the true rate of inflation
a. True b. False
Suppose that investment is not very responsive to interest rates, so that a sizable increase in interest rates has only a minor effect on investment. In this case, monetary policy would have:
A. a massive effect on output. B. no effect on output. C. a modest effect on output. D. a substantial effect on output.