When economists speak of the short run, they are referring to _____
a. a specific period of time, usually less than one year
b. a specific period of time, more than one year, but less than two years
c. a specific period of time just long enough that the quantities of all resources can be varied
d. a period of time short enough that the quantities of at least one of the resources cannot be varied
e. a period of time short enough that none of the quantities of the resources can be varied
d
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The domestic currency price of a representative domestic expenditure basket is
A) P, the domestic price level. B) E, the nominal exchange rate. C) P times E, the domestic price level times the domestic price level. D) P , the foreign price level. E) P times E, the foreign price level times the nominal exchange rate.
Actions based on the more general Pareto criteria are preferable to actions based on application of interpersonal utility calculations
a. True b. False
When the benefit-cost ratio of a project is greater than 1, the project should be considered.
A. True B. False C. Uncertain
What are the results of a contractionary monetary policy in an open economy with floating exchange rates and internationally mobile capital?
a. The dollar appreciates, which leads to an increase in exports and a decrease in imports. The country therefore winds up with a deficit in capital and a surplus in its balance of trade. b. The dollar appreciates, which attracts foreign capital. Also, imports rise and exports decline. The country therefore winds up with a surplus in capital and an increase in its trade deficit. c. The dollar depreciates, which attracts foreign capital. Also, exports rise and imports decline. The country therefore winds up with a deficit in capital and a surplus in its balance of trade. d. The dollar depreciates, which leads to a larger real GDP and a larger trade surplus.