If the Fed reduces the money supply to reduce inflation, a floating exchange rate will aid the Fed in fighting inflation because
A. as the money supply is decreased, the interest rate will increase, and the price of U.S. exports will fall and the price of U.S. imports will rise.
B. as the money supply is decreased, the interest rate will increase, and the price of U.S. exports will rise and the price of U.S. imports will fall.
C. as the money supply is decreased, the interest rate will increase, and the price of U.S. exports and U.S. imports will fall.
D. as the money supply is decreased, the interest rate will increase, and the price of both U.S. exports and U.S. imports will rise.
Answer: B
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The graph illustrates the supply of sweaters. Which of the following events will increase the supply of sweaters?
A) a rise in the price of a sweater B) a rise in the wage rate paid to the workers who make sweaters C) a rise in the expected future price of a sweater D) an increase in the number of sellers of sweaters E) an increase in income if sweaters are a normal good
A Rolling Stones song goes: "You can't always get what you want." This echoes an important theme from microeconomics. Which of the following statements is the best example of this theme?
A) Consumers must make the best purchasing decisions they can, given their limited incomes. B) Workers do not have as much leisure as they would like, given their wages and working conditions. C) Workers in planned economies, such as North Korea, do not have much choice over jobs. D) Firms in market economies have limited financial resources.
If your income goes up by 2% and, in response, the quantity demanded of good x falls by 3%, the good x can be considered
a. An inferior good b. A normal good c. A public good d. A private good
Leakages are offset by investment and government spending in the circular flow model.
Answer the following statement true (T) or false (F)