When the economy strengthens, following the period of quantitative easing, the Federal Reserve plans to keep a lid on money growth by
A. selling dollars in foreign-exchange markets.
B. increasing the interest rate paid on reserves.
C. buying dollars in foreign-exchange markets.
D. increasing reserve requirements.
Answer: B
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All of the following involve a moral hazard problem EXCEPT
A) an individual driving carelessly after buying a comprehensive insurance policy for a Ford Pinto. B) the IMF bailing Mexico out of a financial crisis, with promises to do the same for other nations that might face financial problems. C) making regular visits to your doctor because you know that you have full healthcare coverage. D) the requirement of banking institutions that owners invest a substantial portion of their own capital in their bank. E) membership in FDIC (Federal Deposit Insurance Corporation) by your local bank.
After Norway unilaterally pegs the krone to the euro, domestic money market disturbances will
A) no longer affect domestic output despite the continuation of float-rate regime against non-euro currencies. B) now have major effect on domestic output despite the continuation of float-rate regime against non-euro currencies. C) have some effect on domestic output despite the continuation of float-rate regime against non-euro currencies. D) have major effect on domestic employment despite the continuation of float-rate regime against non-euro currencies. E) no longer affect foreign imports despite the continuation of float-rate regime against non-euro currencies.
If a nation has "cheap" labor, a. it can still benefit from trade
b. it is unlikely to have a comparative advantage in the production of goods that are highly capital intensive. c. it cannot have a comparative advantage in everything. d. all of the above are true.
When a firm's only variable input is labor, then the slope of the production function measures the
a. quantity of labor. b. quantity of output. c. total cost. d. marginal product of labor.