Borrowing in one's own currency has many advantages for low-income nations (such as Chile). Which of the following is NOT an advantage?
A) Service payments are usually retained in the nation.
B) Defaults are typically not an issue.
C) The nation is never obliged to repay—it can roll over the debt in perpetuity.
D) More national debt actually helps credit markets deepen and mature.
Ans: C) The nation is never obliged to repay—it can roll over the debt in perpetuity.
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
Which of the following arguments could be made as evidence that the market for cage-free eggs is perfectly competitive?
A) As more farmers began selling cage-free eggs, the increase in supply has driven down prices to the point where they just cover the cost of production. B) Sales of cage-free eggs have increased at a rate of 20 percent per year. C) The profits earned by farmers who sell cage-free eggs have continued to grow, despite the increasing number of farmers entering this market. D) The U.S. Department of Agriculture has established standards for the labeling of cage-free eggs.
A weaker U.S. dollar in world exchange markets means that
A. Foreigners buy the dollars that they have. B. A dollar buys more units of foreign currency than it could before. C. A dollar buys less units of foreign currency than it could before. D. A dolar buys the same amount of foreign currency than it could before, with gold backing up the value of the dollar.
Refer to the accompanying figure.
Based on the figure and starting from an initial short-run equilibrium where output equals 20,000, if autonomous consumption spending increases by 1,000, then the new short-run equilibrium output (Y) is equal to:
A. 24,000. B. 16,000. C. 6,000. D. 14,000.