Proprietary income refers to:
A. revenue flowing to the government from taxes.
B. money borrowed by the government to finance its operations.
C. revenue generated by government-run businesses.
D. transfer payments from the government to the owners of property resources.
Answer: C
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
Other things the same, if there is an increase in the money supply growth rate that is larger than expected, then in the short run
a. the natural rate of unemployment rises. b. the natural rate of unemployment falls. c. the unemployment rate will be above its natural rate. d. the unemployment rate will be below its natural rate.
Because of the United States' long-standing trade deficit with Japan, the supply of U.S. dollars in Japan has increased. Which of the following is true about this situation?
A. The trade deficit will continue to increase in size as Japan gains more U.S. dollars and economic strength. B. We cannot say anything for sure about the trade deficit other than that it exists. C. The value of the U.S. dollar will decrease in terms of the yen, ceteris paribus, thereby reducing the trade deficit. D. Trade restrictions on Japanese imported goods are ultimately the only way to reduce the trade deficit.
The J-curve effect means that import prices are higher, thus revenues paid out increase while export prices are lower and incoming revenues decrease. Therefore, after a currency depreciation:
a. the trade balance will improve, then decline, then improve, and then decline, appearing to be a series of J shapes. b. the trade balance will increase, then decrease, then jump higher, which economists call the J-curve effect. c. the nation will cut back on imports immediately causing the trade balance to improve, which gives the curve an inverted J shape. d. the trade balance decreases and then increases over time giving the curve a J shape.