Monetarists argue that fiscal policy is ineffective because:
A. the velocity of money is predictable.
B. the crowding-out effect reduces investment.
C. prices and wages are sticky in the short run.
D. it causes the value of the dollar to depreciate.
Answer: B
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If an economy is producing inefficiently, it is
A. possible to increase production of all goods simultaneously. B. possible to increase production of one good at the expense of another. C. not possible to increase production of any good. D. not possible to increase economic growth. E. possible to increase production with no effort.
If the additional revenue from hiring an additional worker equals the additional costs from hiring the extra worker, then we know that
A) MFC = MPPL. B) MFC/MPPL = wage. C) MFC/MRPL = 1. D) MRPL/P = MFC.
Suppose a firm produces the level of output at which the marginal cost of the last unit produced equals the price of the good. Which of the following statements is always true?
A. The firm should produce more if its economic profit is positive. B. The firm should shutdown if its total revenue is less than its variable cost. C. The firm will earn a positive economic profit. D. The firm is maximizing its profit.
The U.S. dollar exchange rate, e, expressed as Japanese yen per U.S. dollar, will depreciate when:
A. the U.S. Federal Reserve tightens monetary policy. B. U.S. consumers decrease their preference for Japanese cars. C. real GDP in Japan increases. D. real GDP in the U.S. increases.