Figure 9-4
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In Figure 9-4, if the economy faces an inflationary gap, what must happen to reach potential GDP?
A. The expenditure level must rise and/or the price level must rise.
B. The expenditure level must rise and/or the price level must fall.
C. The expenditure level must fall and/or the price level must fall.
D. The expenditure level must fall and/or the price level must rise.
Answer: D
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The Fed is a central bank and as such
A) does business only with the federal government. B) provides banking services to banks but not individuals. C) provides banking services to individuals and firms. D) does business with international organizations such as the United Nations. E) is where the Federal Government turns when it needs to borrow.
There is an exchange rate between
A. every pair of currencies. B. the world’s major currencies but not between the currencies of less-developed countries. C. currencies on a fixed exchange rate system but not for those on a floating rate system. D. the currencies of the European Union but not for the nations outside the European Union.
How have states' control over globalization shifted in recent years?
a. It has decreased due to their lack of power over today's elimination of barriers to commerce. b. It has decreased since they have to be more mobile actors than other elements involved. c. It has increased since private international financial transactions now boost the resources controlled by states. d. It has increased due to their own strengthened ability to move money and goods in and out of their territories.
Suppose an economy experiences an increase in its saving rate. The higher saving rate leads to a higher growth rate of productivity
a. in the short run, but not in the long run. b. in the long run, but not in the short run. c. in both the short run and the long run. d. in neither the short run nor the long run.