The balance of payments constraint refers to the limits on:
A. exchange rate policy imposed by flexible exchange rates.
B. currency convertibility observed in most developing countries.
C. domestic macroeconomic policy, arising from a shortage of international reserves.
D. macroeconomic policy resulting from IMF conditionality.
Answer: C
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As the price of milk increases, producers are normally willing to supply greater quantities. This is known as the law of
a. demand b. gravity c. variable proportions d. profitability e. supply
Which one of the following conclusions is not supported by the intertemporal substitution hypothesis?
A. Hours of work increase as the wage rises and decline as the wage falls. B. Hours of work over the life cycle will be inversely related to wages over the life cycle. C. An unemployed person might choose to become a discouraged worker during a low-wage recession with an eye toward returning to the labor market when wages increase. D. The profile of hours of work over the life cycle will have roughly the same shape as the age-earnings profile. E. A high wage worker may choose to work 60+ hours a week during her peak wage years in order to retire at a younger age later in life.
If the price of good A increases from $15 to $20 per unit and quantity demanded falls from 150 to 100 units, then by using the method of average values, we can calculate the absolute price elasticity of demand to be
A) 2.6. B) 0.75. C) 1.4. D) 2.4.
In the first half of 2017, automobile sales in the United States were lower than they were in the first half of 2016. The decrease in auto sales impacts GDP because new automobiles are counted as ________ when purchased by households and ________ when
purchased by businesses. A) nondurable goods; durable goods B) consumption; investment C) investment; consumption D) durable goods; nondurable goods