If a nation wants to get the most out of its resources, each productive assignment should be carried out by those persons who
What will be an ideal response?
have a comparative advantage in the productive activity
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One problem with the ripple effect from the Fed's monetary policy is
A) the fact that the monetary policy transmission process is long and drawn out. B) that changing the Federal funds target rate seldom has an effect on the markets for reserves and loanable funds. C) the frequent misalignment of the spread between the Federal funds rate and the Federal funds rate target. D) that the Fed's policy sometimes has a large impact on potential GDP as well as its usual impact on aggregate demand. E) the tight relationship between that the Federal funds rate has to aggregate spending.
Unlike implicit costs, explicit costs
a. reflect opportunity costs b. include the value of the owner's time c. are not included in a firm's accounting statements d. are actual cash payments e. do not change as a firm's output changes
Assume the FE curve is flatter than the LM curve. A negative external capital-flow shock shifts the FE curve left. Under zero sterilization, which one of the following will happen next?
A. Because of the incipient balance of payments surplus, the LM curve will shift rightward. B. Because of the incipient balance of payments deficit, the LM curve will shift leftward. C. Because of the incipient balance of payments deficit, the IS curve will shift rightward. D. Because of the incipient balance of payments surplus, the IS curve will shift leftward.
If the quantity of money demanded is less than quantity of money then interest rate will
A. The same. B. Increase. C. Decrease. D. Indeterminate.