The argument that budget deficits are inflationary is
A. always correct.
B. correct only when the deficit is monetized.
C. correct only when the aggregate supply curve is horizontal.
D. correct only when the aggregate supply curve is upward sloping.
Answer: D
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How will the exchange rate (foreign currency per dollar) respond to an increase in preference for imported goods in the United States in the long run?
A) Exchange rates will be unaffected by changes in the relative rate of productivity growth in the United States, both in the short run and in the long run. B) Exchange rates will fall. C) Exchange rates will rise. D) The exchange rate will be affected in the short run, but not in the long run.
Suppose that the opportunity cost of producing a rocking chair in Mexico is 50 basketballs and the opportunity cost of a rocking chair in Japan is 80 basketballs. Japan and Mexico can realize mutual gains if the terms of trade are
a. greater than 80 basketballs per rocking chair, and Japan produces rocking chairs b. between 50 and 80 basketballs per rocking chair, and Japan produces basketballs c. greater than 80 basketballs per rocking chair, and Mexico produces basketballs d. less than 50 basketballs per rocking chair, and Japan produces basketballs e. between 50 and 80 basketballs per rocking chair, and Japan produces rocking chairs
Relative to explicit price fixing, with implicit price fixing:
A. firms will find it more difficult to figure out why the price leader has set the price that it has. B. the reasons for the price leader's pricing strategy will be more clear and less ambiguous. C. firms face a higher risk of prosecution for antitrust violations. D. consumers will pay higher prices.
Which approach to measuring money focuses on the value of currency, transaction deposits, and travelers checks?
A. M2 B. the transactions approach C. the liquidity approach D. near moneys