The LM curve shows that, with a fixed supply of money, as GDP rises, the demand for money will ____ and the rate of interest will ____.
A) rise; rise
B) fall; fall
C) rise; fall
D) fall; rise
Ans: A) rise; rise
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The market price of one currency in terms of another currency is also known as
A) the exchange rate between those currencies. B) the future rate between those currencies. C) the spot market. D) the value of arbitrage.
New Keynesian economists generally argue that
A) there is an exploitable tradeoff between unemployment and inflation. B) changes in aggregate demand will have relatively greater effects on real GDP when firms change prices less frequently. C) activist policy can be used to reduce the fluctuations in real GDP. D) all of the above
Because majority voting fails to incorporate the strength of the preferences of individual voters, it:
A. creates negative externalities. B. under some circumstances produces economically inefficient outcomes. C. leads to market failure. D. leads to politics dominated by special interest groups.
Which of the following is NOT necessary for price discrimination to occur?
A. The firm must be able to separate the market into identifiable groups. B. The firm must have a downward sloping demand curve. C. The firm has to be able to prevent resale of the product or service. D. The firm must be selling a durable good.