To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
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If there are no net factor payments from abroad and no unilateral transfers, net exports of $10 billion is the same as
A) a current account deficit of $10 billion. B) a financial account surplus of $10 billion. C) net acquisition of foreign assets of $10 billion. D) net foreign borrowing of $10 billion.
The supply curve slopes
A. upward to the right. B. upward to the left. C. downward to the right. D. downward to the left.
When the price level increases, the purchasing power of money:
A. decreases. B. stays the same since the purchasing power of money is not impacted by price levels. C. increases by a similar amount. D. first increases and then decreases as people get used to higher prices.
Recall the Application about the policies used by the European Union to support the agricultural sectors of is member countries to answer the following question(s). According to this Application, the policies used by the European Union to support the agricultural sectors of its member countries created excess supply. Excess supply can be generated if a government establishes a:
A. price ceiling below the market equilibrium price. B. price ceiling above the market equilibrium price. C. price floor below the market equilibrium price. D. price floor above the market equilibrium price.