Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C
B. D; B
C. A; B
D. B; C
Answer: B
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When the demand for loanable funds rises, the amount of money borrowed will ___________.
A. rise B. decline C. be unchanged
When commercial banks borrow reserves from the Fed, the quantity of reserves in the banking system ________ and, ultimately, the money supply ________.
A. decreases; increases B. increases; increases C. increases; decreases D. decreases; decreases
The largest portion of any nation's balance of payments current account is the
A. importing and exporting of gold. B. importing and exporting of services. C. importing and exporting of capital goods. D. importing and exporting of merchandise goods.
Developing countries are usually unwilling to negotiate over labor standards because
A) the WTO always tends to rule in favor of industrialized nations. B) they fear that industrialized nations are trying to undermine their comparative advantage—production of agriculture and textiles/apparel—and close the markets of high-income countries in these areas. C) they fear that they may be unable to compete without some protection of their industries. D) they don't have a comparative advantage in any good at all. E) organized labor would not allow them to negotiate with other countries.