Explain what policies are used to stabilize the value of money.
What will be an ideal response?
Monetary policy is used to regulate the money supply in the economy. If too much money is available for the given level of production of goods and services, this situation can lead to inflation and reduce the value of money. Fiscal policy can also be used to help maintain the value of money. The U.S. government needs to be prudent in its spending and taxing actions (fiscal policy) so that it does not reduce the value of money by running large deficits when the economy is at full-employment.
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One of the largest challenges with foreign aid today is:
A. finding ways to ensure it is going to the best uses possible. B. raising enough of it to have any significant impact on the market. C. countries' overreliance on it removing incentives to better themselves. D. severely diminishes some nations’ ability to help their own citizens.
Increased government spending is an example of:
A. expansionary monetary policy. B. contractionary monetary policy. C. contractionary fiscal policy. D. expansionary fiscal policy.
How would the market for coffee be affected if the government charged an excise tax of $2.00 on each unit of coffee sold?
A. The demand for coffee would decrease. B. The supply curve would shift up vertically by $2.00. C. There would be a shortage of coffee. D. The demand for coffee would increase.
Consider the market for dollars. If the exchange rate rises from 2 pesos per dollar to 4 pesos per dollar
A) the supply curve of dollars shifts leftward. B) the supply curve of dollars shifts rightward. C) there is an upward movement along the supply curve for dollars. D) there is a downward movement along the supply curve for dollars.