The buying and selling of foreign currency by the central bank is a trade policy whose objective is:
A. reducing purchases of assets abroad.
B. stabilizing the exchange rate against external shocks.
C. stabilizing the interest rate against foreign capital outflows.
D. promoting long term economic growth.
Answer: B
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When there are economies of scale,
A) MC > AC, so cost-output elasticity is greater than AC. B) MC < AC, so cost-output elasticity is less than AC. C) MC < AC, so cost-output elasticity is greater than 1. D) MC < AC, so cost-output elasticity is less than 1. E) long-run marginal cost is declining.
Monetarists argue that business fluctuations are caused by
A. excessive government spending. B. ups and downs in the growth of the money supply. C. changes in tax rates. D. changes in transfer payments.
GDP expressed in constant, or unchanging, prices is called -
a. net national product b. real GDP c. price level d. nominal GDP
Which of the following is a TRUE statement?
A) Externalities cannot be solved by market solutions and always require government action. B) Externalities would never be a problem if people were willing to comply with government regulations. C) Voluntary agreements can solve externality situations by making the party incurring the costs bear the costs of his or her actions. D) Externalities can only be handled by government regulation and emission taxes cannot work effectively.