Critics of debt relief make all of the following arguments EXCEPT
A) it would be wasted money since the conditions that caused the debt would be likely to persist.
B) debt relief can quickly fuel a new round of borrowing that simply restores debt to prior levels.
C) debt relief will encourage other nations to borrow excessively with the hope that their debts may be forgiven in the future.
D) the cost of debt relief to the most severely indebted countries is too large for the high income countries to afford.
D
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It is necessary for the Federal Reserve to regulate the money supply because
a. banks tend to act in a counter-cyclical manner with regard to the money supply. b. banks are not profit-oriented, and tend to be unresponsive to the needs of business. c. left to itself, the banking system will create a gyrating money supply that will be destabilizing. d. left to itself, the banking system will not be able to increase or decrease the money supply.
When a country experiences capital flight its
a. net capital outflow increases and its real exchange rate rises. b. net capital outflow increases and its real exchange rate falls. c. net capital outflow decreases and its real exchange rate rises. d. net capital outflow decreases and its real exchange rate falls.
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y1. C. P3 and Y1. D. P3 and Y2.
If saving is greater than intended investment, the economy is
a. in equilibrium, and there is no change in business inventories b. not in equilibrium, and business inventories will decrease c. in equilibrium, and actual investment is equal to intended investment d. not in equilibrium, and business inventories will increase e. not in equilibrium, and the level of income will rise