If exchange rates are floating, the Fed increasing its target inflation rate will cause the dollar to ________ relative to other currencies and cause net capital outflows to ________
A) appreciate; increase
B) appreciate; decrease
C) depreciate; increase
D) depreciate; decrease
C
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The principal-agent problem
A) occurs when managers have more incentive to maximize profits than the stockholders-owners do. B) in financial markets helps to explain why equity is a relatively important source of finance for American business. C) would not arise if the owners of the firm had complete information about the activities of the managers. D) explains why direct finance is more important than indirect finance as a source of business finance.
The level of income is unchanged in response to unanticipated anti-inflation policy in ________
A) real business cycle theory B) traditional Keynesian theory C) new Keynesian theory D) post classical theory
The difference between the federal budget deficit and the national debt is that the:
a. deficit is a stock variable and the debt is a flow variable. b. deficit is a flow variable and the debt is a stock variable. c. debt includes interest payments and the deficit does not. d. deficit can be positive, but the debt can not e. debt can be negative, but the deficit cannot.
Two countries with the same saving rates must have the same growth rate of real GDP per person
a. True b. False Indicate whether the statement is true or false