The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier.
B. self-correcting property.
C. short-run equilibrium property.
D. long-run equilibrium property.
Answer: B
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A country has a comparative advantage over another in the production of gadgets if it can produce
A. more gadgets than can the other country. B. more gadgets than can any other country. C. gadgets more efficiently than it can produce any other good. D. gadgets at lower opportunity cost than can the other country.
In contrast with nominal values, real values refer to nominal values
What will be an ideal response?
Holding all else constant, a decrease in U.S. real GDP will ________ the supply for dollars in the foreign exchange market and ________ the equilibrium Mexican peso/U.S. dollar exchange rate.
A. increase; decrease B. decrease; decrease C. decrease; increase D. increase; increase
In chapter 20, the expected future nominal exchange rate in the long run say, Eet+n, is assumed to be the nominal exchange rate at which
A) the current account is in balance. B) the future rate of appreciation or depreciation is constant. C) domestic and foreign price levels are equal. D) one unit of foreign currency exchanges for one unit of domestic currency. E) none of the above