If there is an increase in the price of oil and the Fed wishes to maintain price stability, what should it do?
a. Do nothing, because the self-correcting mechanism will adjust the economy
b. Sell bonds in the open market
c. Wait, because the price level seldom changes when there is an increase in the price of oil
d. Encourage firms to not adjust the wages they pay
e. Buy bonds in the open market
B
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Starting from an initial long-run equilibrium, under the adaptive expectations hypothesis, a shift to a more expansionary policy will increase
a. prices and unemployment in the long run. b. real output in the short run but not in the long run. c. real output in the long run but not in the short run. d. real output in both the long run and the short run.
Whenever a country has an absolute advantage in the production of a good, that implies that the country should specialize in the production of that good
a. True b. False Indicate whether the statement is true or false
If the exchange rate between the Russian ruble and the U.S. dollar is 33.3 rubles for $1, then how much is each ruble worth in U.S. dollars?
a) $0.03 b) $0.30 c) $0.33 d) $33.3
Monetarists believe:
A. the cause-and-effect relationship hypothesized by the Keynesians understates the impact of stimulative monetary policy. B. the cause-and-effect relationship hypothesized by the Keynesians is an accurate description of how monetary policy works. C. since the economy is operating at full employment, any stimulative monetary policy will cause the inflation rate to rise. D. the cause-and-effect relationship hypothesized by the Keynesians is backwards, and decreases in the money supply actually stimulate economic activity.