If a firm is a price taker, then the demand curve faced by the firm is perfectly elastic
a. True
b. False
Indicate whether the statement is true or false
True
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How does a decrease in value of a country's currency relative to other currencies affect its balance of trade?
A) A decrease in value of a country's currency relative to other currencies reduces imports, raises exports, and increases the balance of trade. B) A decrease in value of a country's currency relative to other currencies raises imports, reduces exports, and increases the balance of trade. C) A decrease in value of a country's currency relative to other currencies raises imports, reduces exports, and reduces the balance of trade. D) A decrease in value of a country's currency relative to other currencies reduces imports, raises exports, and reduces the balance of trade.
The Lucas critique is an objection to the assumption that
A) inflation is always and everywhere a monetary phenomenon. B) there is a negative relationship between inflation and unemployment. C) historical relationships between macroeconomic variables will continue to hold after new policies are in place. D) people form expectations rationally.
Refer to Figure 14.2. Other things equal, a movement from point C to point B would be caused by
A) an increase in the price level. B) a decrease in the price level. C) a positive supply shock. D) a negative supply shock.
The alternatives of the active versus passive view of stabilization policy are usually expressed as
A. fiscal policy versus monetary policy. B. internal versus external. C. present value versus future value. D. discretion versus rules.