Commitment devices are:
A. methods to increase the price of your vices.
B. successful whether weak or strong, depending on the situation.
C. methods to lower the price of your virtues.
D. All of these statements are true.
Answer: D
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As trade occurs, increased imports will force domestic importcompeting firms to decrease price and production. Labor and capital will move to exporting firms. What will then happen to wages and returns to capital?
a. Both wages and returns to capital will increase. b. Both wages and returns to capital will decrease. c. Wages will increase and returns to capital will decrease. d. Wages will decrease and returns to capital will increase
Based on the graph showing a reduction in the growth of the money supply, the implication of the economy moving from point D to point F is that policies to alter output or unemployment ______.
a. can eliminate long-term unemployment problems
b. can help the economy sustain high output levels over long periods
c. take a long time to produce any noticeable effects
d. are ineffective over time because the economy returns to natural levels
Which of the following factors would indicate a less elastic demand?
A. The good represents a large fraction of the budget. B. Demand is measured over a longer period of time. C. There are few substitutes. D. The price of the good is high.
Implementing short-term capital controls during the Asian crisis caused Malaysia to recover more slowly than other countries
Indicate whether the statement is true or false