The balance of payments constraint refers to the limits on:
A. exchange rate policy imposed by flexible exchange rates.
B. currency convertibility observed in most developing countries.
C. domestic macroeconomic policy, arising from a shortage of international reserves.
D. macroeconomic policy resulting from IMF conditionality.
Answer: C
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One opportunity cost associated with going to college is
A) purchasing text books. B) paying tuition. C) giving up employment possibilities while in college. D) paying for room, board, and other living expenses.
If labor market institutions change so that it becomes easier to find a job, and unemployed people are unemployed for smaller durations of time, what would happen to the natural rate of unemployment?
A. It would increase. B. It would remain the same, since the number of workers has not changed. C. It would decrease. D. There is not enough information to determine what would happen.
Refer to Figure 13-4. Given the economy is at point A in year 1, what is the difference between the actual growth rate in GDP in year 2 and the potential growth rate in GDP in year 2?
A) 0.3% B) 1.1% C) 2.7% D) 3.7%
Adverse selection is a problem that arises:
A. before the parties have entered into an agreement. B. after the parties have voluntarily entered into an agreement. C. either before or after the parties have entered into an agreement. D. rarely in any market.