Paternalism describes a situation in which:
A. people are likely to make bad decisions over and over.
B. the government passes laws that require citizens to change their behavior.
C. there is no role for firms to influence people's behavior.
D. people are led to make better decisions (as judged by an outside decision maker).
Answer: D
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The real rate of interest is
a. interest paid by commercial banks. b. interest paid by the Fed. c. equal to the money rate of interest plus the inflationary premium. d. the money rate of interest adjusted for inflation.
Assume a country experiences heavy capital outflows. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions? Assume the exchange rate is stated as: (Domestic currency/Foreign currency)
a. Start the analysis in the foreign exchange market with demand shifting to the right. b. Start the analysis in the foreign exchange market with supply shifting to the left. c. Start the analysis in the foreign exchange market with supply shifting to the right. d. Start the analysis in the real credit market with demand shifting to the left. e. Start the analysis in the real credit market with demand shifting to the right.
Training policies adapt the demand for labor to the supply of labor
Indicate whether the statement is true or false
Suppose that severe floods destroyed farms, homes, and businesses in the Midwest. Use the aggregate demand/aggregate supply model, to explain the changes you would expect to take place and the effects you would expect these floods to have on both output and prices. (Include both short-run and long-run effects.)