The balance of payments constraint refers to the limits on:
A. exchange rate policy imposed by flexible exchange rates.
B. currency convertibility observed in most developing countries.
C. domestic macroeconomic policy, arising from a shortage of international reserves.
D. macroeconomic policy resulting from IMF conditionality.
Answer: C
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An isoquant shows the various combinations of labor and capital that
a. the firm will choose to employ in the long run. b. yield the same total cost. c. can produce some fixed level of output. d. minimize the firm's average cost of production.
Policymakers often use the natural rate of unemployment as a basis in policy formulations
Indicate whether the statement is true or false
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real GDP and current international transactions in the context of the Three-Sector-Model?
a. Real GDP rises, and current international transactions become more negative (or less positive). b. Real GDP and current international transactions remain the same. c. There is not enough information to determine what happens to these two macroeconomic variables. d. Real GDP falls, and current international transactions become more negative (or less positive). e. Real GDP rises, and current international transactions remain the same.
The soft-drink and automobile industries would be examples of which market model?
A. Monopolistic competition B. Pure competition C. Pure monopoly D. Oligopoly