Because of a recession in Japan, net exports from the United States decrease by $10 billion. If the MPC is 0.75, how much less spending will occur in the U.S. economy in the second “round” of spending?
A. $17.5 billion
B. $10 billion
C. $7.5 billion
D. $5.0 billion
Answer: C
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Shortages occur when
a. many people are unemployed. b. interest rates go up. c. people have trouble supplying the goods and services at current prices. d. the United States imports more than it exports.
The liquidity trap is often compared to:
A. pulling on a string. B. pushing on a string. C. pushing banks into a hole filled with liquid. D. pulling banks into a hole filled with liquid.
Which of the following statements about trade and domestic pollution is accurate?
A. If polluters are not forced to internalize the external costs associated with their production, free trade could result in the country exporting the wrong products. B. In the presence of free trade, the costs of pollution can be transferred almost completely by the exporting country to the importing country. C. It is possible for free trade to hurt a country if polluters are forced to internalize the external costs associated with their production. D. Free trade is likely to cause producers to reduce their levels of pollution due to international competition.
If the Federal Reserve raises the discount rate, banks will be inclined to borrow additional reserves and the money supply will increase.
Answer the following statement true (T) or false (F)