Federal Reserve actions that increase nominal interest rates and decrease the money supply:
A. raise bond prices.
B. close a recessionary gap.
C. close an expansionary gap.
D. raise the rate of inflation.
Answer: C
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The outcome of regulating a natural monopoly using the marginal cost pricing rule is
A) that the firm makes a normal profit. B) that the firm maximizes its profit. C) that consumer surplus is less than what it would be if the firm maximized its profit. D) an efficient level of production. E) that the firm makes an economic profit.
Fiscal policy involves discretionary changes in
A) interest rates. B) exchange rates. C) income tax rates. D) the rate of growth of the quantity of money in circulation.
Economists who study the role of government in the market
A. agree mostly on the role that the government should play. B. study for market problems that the government might help solve. C. find that supply and demand graphs never work for the government. D. none of these answer options are correct.
Assume a two-country, two-commodity, two-input model where the following relationships hold:(K/L)U.S. > (K/L)ROW (K/L)automobiles > (K/L)shoes(K/L)U.S. is the capital-labor ratio in the United States, (K/L)ROW is the capital-labor ratio in the Rest of the World, (K/L)automobiles indicates the capital-labor ratio in the production of automobiles, and (K/L)shoes indicates the capital-labor ratio in the production of shoes.Assume further that technology and tastes are the same in the United States and the Rest of the World. This information indicates that the United States
A. is a relatively land-abundant country. B. is a relatively capital-abundant country. C. has a scarcity of land. D. is a relatively capital-scarce country.