Without considering the effect that a change in the value of a currency might have on trade, the net effect of a contractionary fiscal policy is:
A. negative with respect to the exchange rate and positive with respect to the trade balance.
B. positive with respect to the exchange rate and negative with respect to the trade balance.
C. ambiguous with respect to the exchange rate, but positive with respect to the trade balance.
D. ambiguous with respect to the trade balance, but positive with respect to the exchange rate.
Answer: C
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One of the necessary conditions for the classical model to be TRUE is that
A) wages were flexible and prices are fixed. B) wages and prices are fully flexible. C) wages and prices are partly flexible. D) wages and prices will not change.
Which condition(s) must exist for the Coase theorem to hold? I. Property rights must exist. II. Transactions costs must be measurable. III. A small number of parties must be involved
A) I and II only B) I and III only C) II and III only D) I, II and III
One purpose of the currency board adopted in Argentina in 1991 was to ________
A) encourage capital mobility B) make monetary policy more effective C) stabilize the exchange rate between the Argentine peso and the currencies of Argentina's major trading partners D) put an end to speculative attacks on the Argentine peso
Government provision of goods and services that cannot easily be provided through markets because it is difficult to establish a one-to-one link between payment and consumption of the good is referred to as the
a. productive function of government. b. protective function of government. c. construction function of government. d. income redistribution function of government.