What is the major problem in a currency union?
A) Money demand becomes more erratic.
B) Participating central banks may not agree on monetary policy.
C) It is akin to dollarization.
D) The capital account becomes difficult to define.
B
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To calculate GDP using the value-added method, one would add up
A) the market value of intermediate goods and services produced during a particular period. B) the value added by each firm involved in the production of final goods and services. C) the market value of final goods and services produced during a particular period. D) only the value added by the underground economy.
Changes in ________ that are intended to achieve macroeconomic policy objectives refer to fiscal policy
A) exchange rates B) interest rates C) government taxes and purchases D) the money supply
Which of the following events would not be recorded in the U.S. balance of payments?
a. The money supply of a foreign nation increases. b. Oxfam America, a U.S. relief agency, sends food to drought victims in sub-Saharan Africa. c. Oxfam America, a U.S. relief agency, sends farm equipment to drought victims in sub-Saharan Africa. d. The Pentagon stations troops in Saudi Arabia. e. Pepsi-Cola sends its soft drink to Russia; in return, the United States gets Stolichnaya vodka. No money changes hands.
Deflation
a. increases incomes and enhances the ability of debtors to pay off their debts. b. increases incomes and reduces the ability of debtors to pay off their debts. c. decreases incomes and enhances the ability of debtors to pay off their debts. d. decreases incomes and reduces the ability of debtors to pay off their debts.