A key assumption of the classical model is that
a. government intervention is important to get markets to clear
b. prices adjust until quantity supplied equals quantity demanded
c. markets never clear in the long run
d. demand adjusts in order to meet supply
e. prices remain constant and supply and demand adjust
B
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Refer to Figure 19-5. The Chinese government pegs the yuan to the dollar, at one of the specified exchange rates on the graph, such that it undervalues its currency. Using the figure above, this would generate
A) a surplus of yuan equal to 400 million. B) a surplus of yuan equal to 300 million. C) a surplus of yuan equal to 200 million. D) a shortage of yuan equal to 200 million. E) a shortage of yuan equal to 400 million.
What does it mean for a money market mutual fund to "break the buck"?
A) The value of its share declines below $1. B) It incurs losses on its investments. C) It increases its fees to more than 1% of net asset value. D) It is unable to meet the demand for withdrawals by investors.
Adding the assumption of pure competition and complete flexibility of all prices and wages to the rational expectations hypothesis yields a theory that provides support for
A. discretionary policy making. B. passive policy making. C. irrelevant policy making. D. active policy making.
Which of the following did not occur during the early years of the Great Depression?
(a) Marriage rates fell. (b) Birth rates fell. (c) Divorce rates increased. (d) Actually, all of the above occurred.