Assume the economy is initially in equilibrium where potential GDP is greater than real GDP
If the expected inflation rate, the term structure effect, and the default-risk premium are constant, a decrease in the Fed's target short-term nominal interest rate will ________ the MP curve and the output gap will become ________. A) shift up; smaller
B) shift up; larger
C) shift down; smaller
D) shift down; larger
C
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Why is the social marginal benefit of a common property smaller than the value that people, on average, receive from it?
a. Because use of a common property is nonrivalrous. b. Because when one additional person uses the common property, it lowers the value that others receive from it. c. Because entrance fees must be taken into account when determining the social benefit derived from a common property. d. Because "free riders" will use the common property without contributing to its costs.
Commodity money has intrinsic value
Indicate whether the statement is true or false
Large countries can improve their welfare by levying a tariff only if it does not
A) encourage rent seeking elsewhere in the economy. B) discourage innovation. C) lead to retaliation by the nation's trading partners. D) All of the above. E) None of the above.
Assume that the exchange rate changed from (a) $2/€ to (b) $1.125/€. What are the corresponding exchange rates for the U.S. dollar?
a. (a) €2/$ and (b) €1.125/$. b. (a) €1.125/$ and (b) €2/$. c. (a) €0.50/$ and (b) €0.89/$. d. There is not enough information provided to answer this question.