Under a managed float system, central banks can
A) allow international reserve changes.
B) let exchange rates adjust to market pressure.
C) experience reserve changes and exchange rate changes.
D) All of the above.
D
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When consumption of a good or service produces benefits or costs that are not reflected in the market price for the good, this is known as a(n)
a. externality b. common pool problem c. nonexcludable resource d. public good e. renewable resource
An economic theory is tested by: a. assessing the realism of its assumptions
b. polling economists to see if there is consensus as to the validity of the hypothesis. c. comparing and contrasting its simplicity with related theories. d. comparing its predictions with real-world data.
The aggregate demand shifts to the left if
A) the government increases spending. B) the Fed sells government bonds. C) the government decreases taxes. D) the Fed decreases the required reserve ratio.
Short-run equilibrium output is the level of output at which real GDP
A. equals real GDP per capita. B. equals potential output. C. maximizes firm profits. D. equals aggregate expenditure.