Which of the goals pursued by policymakers in an open economy is desirable because it can reduce the severity of business cycles?
A) exchange-rate stability
B) monetary policy independence
C) free capital flows
D) appreciation of the domestic currency
B
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In the IS-LM model, the expenditure multiplier is [1/(1-b)] when the
A) LM curve is horizontal. B) LM curve is upward-sloping. C) LM curve is vertical. D) IS curve is vertical.
Compared to a perfectly competitive firm, in a long run the monopolistically competitive firm will have
A) a lower price. B) a lower average cost. C) a horizontal demand function. D) a lower rate of output.
A point that lies above the production possibilities frontier (PPF) represents a combination of at least two goods that is
a. unavailable. b. available. c. representative of efficient production. d. representative of inefficient production. e. none of the above
If receipts of factor income from the rest of the world are less than payments of factor income to the rest of the world, then
A. GDP equals GNP. B. GNP equals NNP. C. GNP is greater than GDP. D. GDP is greater than GNP.