Most economists agree that modest inflation is desirable over zero inflation because:
A. it allows a margin of error for those deciding on the money supply.
B. it allows the Fed to more easily engage in expansionary monetary policy.
C. it helps firms to more easily adjust real wages.
D. All of these statements are true.
Answer: D
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Foreign exchange market intervention is most effective when:
a. each country's political leaders agree to cooperate fully with the process. b. leading economists in each country concur that intervention is needed. c. permanent differences between the free market exchange rate and the fixed exchange rate are expected. d. temporary differences between the free market exchange rate and the fixed exchange rate are expected. e. all the countries restrict the international movement of goods and services.
The labor supply curve:
A. has a negative slope. B. shows the relationship between the total quantity of labor supplied by all firms in the economy and the wage rate. C. shows that, all things being equal, more workers will want to work when wages are higher and less will want to work when wages are lower. D. All of these are true.
Which one of the following is NOT a part of the M1 definition of money?
A. checkable and debitable accounts B. savings accounts C. paper currency (i.e., Federal Reserve notes) D. coins
Assume the market for orange juice is perfectly competitive. Orange juice producers currently earn a zero economic profit. Orange juice producers will likely begin to incur economic losses in the short run, and some producers will exit the industry until those remaining earn a zero economic profit, if consumers
A. switch from grape juice to orange juice. B. do not change their demand for orange juice. C. switch from orange juice to grape juice. D. All of the above are correct.