In the liquidity trap, the money demand curve
A) is horizontal.
B) is vertical.
C) is negatively sloped.
D) is positively sloped.
A
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A devaluation of the exchange rate is a policy action that
A) increases the real exchange rate. B) decreases the real exchange rate. C) increases the nominal exchange rate. D) decreases the nominal exchange rate.
Supposed actual investment is greater than planned investment at the current level of output in 2010. Given this information, we know that
A) GDP will tend to increase over time. B) firms' stock of inventories must have increased unexpectedly in 2010. C) saving must be less than planned investment. D) saving must be equal to planned investment.
Which scenario best exemplifies Gresham’s law?
a. Marla has faith in the value of paper money because she knows it can be exchanged for goods and services. b. Hiro prefers to invest his money rather than keep it in physical form or in a deposit account. c. Charlie does not trust banks, so he keeps all his money in the form of physical currency. d. Indira has silver coins she could use to make a purchase, but she prefers to use paper money.
In presidential elections, voters often find that they do not agree with any single candidate on all the issues that matter to them (the voters). This is known as the:
A. Principal-agent problem B. Limited and bundled choice problem C. Rent-seeking behavior problem D. Lack of accountability problem