How does the fact that imports vary directly with GDP affect the stability of the domestic economy?
What will be an ideal response?
Actually this fact should help stabilize the domestic economy. During inflationary periods of rapid growth, rising imports should dampen that growth in domestic aggregate demand. During recessionary periods, the decline in imports should help to offset falling domestic demand as net exports should rise. In other words, a smaller M makes the (X ? M) balance grow.
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Of all financial intermediaries which holds the most assets?
A) pension funds B) commercial banks C) insurance companies D) hedge funds
The president of a college has been told that when they raised their tuition by 15 percent the previous year, total revenue from tuition remained unchanged. Assuming the change in revenue is due to the change in tuition only, the president could conclude that demand for that college, over that tuition range, must be:
A. greater than 1. B. equal to zero. C. equal to 1. D. less than 1.
Fiscal policy is concerned with government's manipulation of taxing, spending, and the money supply to encourage full employment at stable prices.
a. true b. false
When critics of U.S. farm policy say that it treats symptoms rather than causes, they mean that the:
A. policy attempts to bolster low farm income, while the real problem is an overallocation of resources to agriculture. B. policy deals with the overallocation of resources to agriculture, while the basic farm problem is low incomes. C. policy attempts to bolster low farm incomes, while the real problem is an underallocation of resources to agriculture. D. restriction of output in the short run may reduce productive capacity in agriculture in the long run.