Answer the following statements true (T) or false (F)
1. The financial account of the balance of payments includes the purchase and sale of physical assets but not of financial assets.
2. U.S. balance-of-payments deficits can be financed either through changes in U.S. official reserve assets or through changes in foreign official dollar holdings.
3. In recent years, the IMF has altered its mission from one of providing long-term loans to developing nations to one of providing short-run financial support for dealing with balance-of-payments problems.
4. Meetings among the leaders of the Group of Seven nations have directed the course of international monetary policy in the last decade.
5. The International Monetary Fund was established to stabilize exchange rates and to provide temporary assistance to nations with deficit balance of payments.
1. FALSE
2. TRUE
3. FALSE
4. TRUE
5. TRUE
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At the end of World War I (1918), the United States
A. emerged as the world's leading industrial power. B. was the world's largest economy. C. had become the greatest military power. D. All of the choices are true.
When the economy is in the liquidity trap, the
A) LM curve is horizontal. B) LM curve is vertical. C) IS curve is horizontal. D) IS curve is vertical.
An increase in the money supply in the Friedman-Lucas money surprise model
A) reduces aggregate output, raises the price level, and reduces the real interest rate. B) increases aggregate output, reduces the price level, and reduces the real interest rate. C) increases aggregate output, raises the price level, and reduces the real interest rate. D) reduces aggregate output, raises the price level, and raises the real interest rate.
Refer to Figure 8.1. At the profit-maximizing level of output,
A) AVC is minimized. B) ATC is minimized. C) MC is minimized. D) total cost is minimized. E) no costs are minimized.