Assume the government decides to reduce spending in order to reduce the budget deficit, which it financed by borrowing in the real credit market. What is the first round effect on the value of the domestic currency, if there is high mobility in the international capital markets?
a. The value of the currency rises.
b. The value of the currency falls.
c. The value of the currency is unaffected.
d. The change in the value of the currency is ambiguous.
.B
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Economies of scale are also known as
a. Increasing returns to scale b. Decreasing returns to scale c. Constant returns to scale d. None of the above
Historical data depicted on a scatter diagram show that consumer spending and disposable income
a. converge as income grows. b. generally move together. c. diverge as income grows. d. show no clear relationship.
An increase in the demand for union labor ________ , so there is no need to restrict labor supply or to ration jobs among union members
a. has no impact on wage and employment b. leads to higher employment and lower wage c. leads to higher wage and employment d. leads to lower wage and employment
Factors of production are the most likely to earn economic rent when they:
A. are used by many different firms. B. are fixed in the short run. C. cannot easily be duplicated. D. have high reservation prices.