An expansionary monetary policy may be less effective than a restrictive monetary policy because ________.
A. commercial banks may not be able to find good loan customers
B. fiscal policy always works at cross purposes with an expansionary monetary policy
C. the Federal Reserve Banks are always willing to make loans to commercial banks that are short of reserves
D. changes in exchange rates complicate an expansionary monetary policy more than they do a restrictive monetary policy
Answer: A
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The wealth effect is another term for the
A) the interest rate effect. B) the real-balance effect. C) substitution effect. D) the indirect effect.
Correcting a market with an externality through taxation is _________ correcting it through a quota.
A. more efficient than B. less efficient than C. just as efficient as D. Any of these statements could be true depending on whether the tax is imposed on the buyer or seller.
Which of the following statements about a trade bloc is accurate?
A. The gains from a trade bloc are shared equally by each member. B. A trade bloc may lower firms' costs by allowing them to exploit economies of scale. C. Increased competition within a trade bloc can result in higher commodity prices in the domestic markets of the member countries. D. A trade bloc can increase the opportunities for domestic business investments but usually repels foreign direct investments into the member countries.
Which of the following is the best example of investment as defined by economists?
A. A restaurant owner buys a freezer to store ingredients for the restaurant meals B. A college professor buys a truck to drive around in C. A business manager purchases stock on the New York Stock Exchange D. A worker deposits money into a long-term retirement account