Real GDP will increase over the long run if
A. the long-run aggregate supply curve shifts continually to the left.
B. the long-run aggregate supply curve shifts continually to the right.
C. the long-run aggregate demand curve shifts continually to the left.
D. prices continually go up.
Answer: B
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If the rate of inflation overseas rises relative to the rate of inflation in the United States, U.S. net exports will tend to ____, causing the exchange value of the U.S. dollar to ____
a. rise; rise b. rise; fall c. fall; rise d. fall; fall
One of the justifications of government stabilization policy is that it may
A. increase the fluctuations in inflation and employment. B. increase the multiplier effect of changes in autonomous spending. C. increase the volatility of economic variables. D. reduce the severity of inflation and unemployment.
Foreign exchange risk is
A. an exchange rate arrangement in which a country pegs the value of its currency to the exchange value. B. the possibility that changes in the value of a nation's currency will result in variations in the market value of assets. C. a financial strategy that reduces the change of suffering losses arising from foreign exchange risk. D. active management of a floating exchange rate on the part of a country's government.
Opponents of government intervention argue that government makes decisions based on:
A. marginal political costs and marginal political benefits. B. marginal social costs and marginal social benefits. C. total costs and total benefits. D. irrational choices.