A favorable balance of trade occurs when:
A. exports equal imports.
B. the balance of payments balances.
C. the current and capital account in the BOP are equal.
D. the value of the exports of goods exceeds the value of the imports of goods.
Answer: D
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Suppose workers at the bakery discover that a new firm making baseballs came to town and is offering higher wage rates. What will happen in the labor market for bakers?
a. The labor supply curve will shift to the right. b. Demand for bakers will increase because the MPP of bakers will decrease. c. The quantity supplied of labor will increase because the wage rate will decrease. d. The MRP of bakers will increase. e. The labor supply curve will shift to the left.
Suppose that the central bank must follow a rule that requires it to increase the money supply when the price level falls and decrease the money supply when the price level rises. If the economy starts from long-run equilibrium and aggregate supply shifts left, the central bank must
a. decrease the money supply so interest rates rise. b. decrease the money supply so interest rates fall. c. increase the money supply so interest rates rise. d. increase the money supply so interest rates fall.
Recent research regarding increases in the Federal minimum wage shows that
A. unemployment is only slightly affected. B. the minimum wage has many benefits. C. it improves labor productivity. D. the unemployment rate rises.
Which of the following reasons helps explain why the aggregate demand curve is downward sloping?
A. The real balances effect or wealth effect: Consumers spend more on goods and services when the price level falls because lower prices increase consumer purchasing power. B. The producer-push effect: At less than full employment, increases in quantity demanded will raise price, and thus will motivate sellers to produce more. C. The hidden inflation effect: As the price level rises, consumers fail to recognize that prices are higher, and consequently they fail to reduce expenditures on goods and services. D. The cost-pull effect: As costs of production rise, consumers are pulled to buy more of the products they want most.