What happens if the price of a product is below the equilibrium price?
A. The buyers will stop purchasing a "cheap" product.
B. The producer will lower the price to sell more product.
C. There will be an excess demand for the product.
D. There will be a surplus of the product.
Answer: C
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The assertion "capital is productive, but the ownership of capital is not," assumes the efficient use of resources
A) is different from technological efficiency and more difficult to achieve. B) is no more likely under one ownership arrangement than another. C) may be significantly affected by transferring ownership from private to public hands. D) sometimes is affected by transferring ownership from public to private hands.
Suppose that Venezuela experiences significant capital outflows after a recent election. If the nation had flexible exchange rates, what effect would these flows have had on Venezuela's overall balance and reserves account?
a. Overall balance would rise and reserves account would fall. b. Overall balance and reserves account would both equal zero. c. Overall balance would fall and reserves account would equal zero. d. Overall balance would equal zero and reserves account would fall. e. Overall balance would fall and reserves account would rise.
When analyzing the impact of a budget deficit, an economist will focus on
A. strictly the ratio of the deficit to GDP (it doesn't matter what is purchased with the borrowed money). B. strictly the amount borrowed. C. strictly the inflation-adjusted amount borrowed. D. the ratio of the deficit to GDP and whether what is purchased with the borrowed money can be considered an investment.
During the course of a bad recession the Fed would probably be doing each of the following, except
A. selling securities on the open market. B. lowering interest rates. C. lowering reserve requirements. D. lowering the discount rate.