When the expenditure schedule is too high, the result is a(n)
a. unemployment surplus.
b. inflationary gap.
c. recessionary gap.
d. budgetary gap.
b
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Assume that the inflation rate in an economy is measured on the vertical axis and the annualized growth rate of money supply minus the annualized growth rate of real GDP is measured on the horizontal axis on a graph
If a curve is plotted to establish the relationship between both variables, the curve is likely to be: A) vertical. B) upward sloping. C) horizontal. D) downward sloping.
Which markets are depicted in the basic circular flow model?
A) the factor market and the bond market B) the stock market and the bond market C) the money market and the foreign exchange market D) the goods market and the stock market E) the goods market and the factor market
Answer the following statements true (T) or false (F)
1. If a nation has an absolute advantage over another nation in the production of all commodities, it is not feasible to take advantage of the principle of comparative advantage. 2. Comparative advantage cannot be applied to activities of individuals. 3. Overspecialization and the resulting dependence on one or a few products by a nation can lead to severe economic fluctuations if demand for those products varies widely. 4. In exercising the principle of comparative advantage, a nation with no absolute advantage should produce a commodity in which it faces a lower opportunity cost than its trading partners face. 5. In the long run, a nation cannot overcome a shortage of labor or land. 6. Increasing opportunity costs occur along the production possibilities curve because not all resources are alike in producing different goods.
Suppose $1.00 U.S. is currently worth $1.5 Canadian. It is expected that the U.S. dollar will be worth $1.2 Canadian in one month. This will cause: a. a decrease in the value of U.S. exports to Canada. b. a decrease in the demand for Canadian dollars. c. an increase in the demand for U.S. dollars
d. a decrease in the demand for U.S. dollars.