All of the following issues were discussed as options for reforming the international financial architecture EXCEPT
A) how high an interest rate the lender of last resort should charge when it makes loans.
B) the length of the payback period.
C) the size of the loans.
D) the moral hazard problem associated with a lender of last resort.
E) if the lender of last resort (i.e., the IMF) should consult and collaborate with other international institutions such as the United Nations and the WTO.
E
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The term "early adopters" refers to
A) consumers who respond quickly to fads, seasonal changes, etc. B) consumers who are willing to pay high prices to be among the first to own new products. C) firms that are the first to implement a new technology that is used to produce new goods or services. D) book clubs that are first to recommend best-selling books to their members.
The model of the market for loanable funds shows that an investment tax credit will cause interest rates to rise and investment to rise. Yet we also suppose that higher interest rates lead to lower investment. How can these two conclusions be reconciled?
Which of the following is true about monetary policy in the liquidity trap?
A. An expansion of the money supply will have the large effect of raising interest rates when the economy is in the liquidity trap. B. Monetary policy will be unable to reduce interest rates further to stimulate investment. C. The demand for money is interest-inelastic in the liquidity trap. D. The opportunity cost of holding money is relatively high at interest rates implied by the liquidity trap.
A change in economic output is ________ if the value of the resulting gains exceeds the value of the resulting losses.
A. always inefficient B. potentially efficient C. irrelevant D. always efficient