When the domestic currency is initially overvalued in a fixed exchange rate regime, the central bank must intervene in the foreign exchange market to ________ the domestic currency, thereby allowing the money supply to ________
A) purchase; decline
B) sell; decline
C) purchase; increase
D) sell; increase
A
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When producing goods and services along a PPF, tradeoffs exist because
A) not all production is efficient. B) society has only a limited amount of productive resources. C) buyers and sellers often must negotiate prices. D) human wants and needs are limited at a particular point in time.
To incentivize employees
a. Measure performance, whether formally or informally b. Tie the performance metrics to compensation c. All of the above d. None of the above
Price elasticity is unit elastic at the midpoint of a linear, downward-sloping demand curve
a. True b. False
According to the supply-side view of fiscal policy, if the impact on tax revenues is the same, does it make any difference whether the government cuts taxes in a way that reduces marginal tax rates or in a way that does not reduce marginal tax rates? a. No; both actions will exert the same impact on aggregate supply and demand
b. Yes; only lower marginal tax rates will increase the incentive to earn income and thereby stimulate aggregate supply. c. No; in both cases people will increase their saving in the expectation of higher future taxes and thereby offset the stimulus effect of lower taxes. d. Yes; interest rates will increase if marginal tax rates are lowered, whereas they will tend to decrease if marginal tax rates are left unchanged.