When the monetary base increases by $2 billion, the quantity of money increases by $10 billion. Thus, the money multiplier equals
A) 0.2.
B) 5.
C) 20.0.
D) 0.5.
B
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If 50 units of resources can produce either 1 ton of sugar beets or 100 lb. of ham in Germany, while 90 units of resources can produce either 2 tons of sugar beets or 300 lb. of ham in Poland,
a. Poland has a comparative advantage in producing both goods b. Germany has a comparative advantage in producing sugar beets c. neither country has an absolute advantage in producing sugar beets, but Poland has an absolute advantage in producing ham d. Germany can produce more ham than Poland can e. mutually beneficial international trade is not possible
When the public perceives that a monetary expansion will be temporary, what happens to nominal interest rates in the short run?
a. They will rise. b. They will overshoot their target. c. They will fall. d. They will be unchanged.
Flexible exchange rates exist when
A. exchange rates are determined by forces of supply and demand. B. speculators bet that a currency will soon be depreciated. C. governments and central banks spend foreign reserves to prop up an exchange rate at a certain level. D. no one knows what the true value of a currency is.
Substitute goods are
A. replacements for one another. B. inferior goods. C. consumed together. D. usually free goods.