An increase in price, facing a perfectly competitive firm, means that the profit-maximizing output level will increase
a. True
b. False
Indicate whether the statement is true or false
True
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In order to raise the federal funds rate, the Fed ________ government securities in open market operations, so that banks' reserves ________ and the quantity of money ________
A) buys; decrease; increases B) buys; increase; decreases C) sells; decrease; decreases D) sells; increase; decreases E) buys; increase; increases
If the world price is below the domestic "no-trade" equilibrium price, then with international trade:
a. the domestic shortage can be eliminated by rationing. b. the domestic surplus can be consumed at home. c. the domestic surplus can be exported to the rest of the world. d. the domestic quantity demanded is equal to that supplied by the world. e. the domestic shortage can be met by foreign imports.
When the dollar depreciates against the euro, which of the following is unlikely to happen?
A) German consumers will buy more U.S. products B) U.S consumers will find German goods to be more expensive C) German firms that export to the U.S. market will have a higher profit D) Americans will not travel to the euro areas as much for vacations
Although macroeconomics textbooks have taught the logic of fiscal policy for over half a century, actual use of discretionary fiscal policy has been rare. When President George W. Bush persuaded Congress to enact a large tax cut early in his presidency, it was the first time in several decades that the fiscal policy rationale was taken seriously. Why has fiscal policy been used so infrequently?
A. The political processes of democracy make timely fiscal policy difficult. B. It has inherent conflicts with monetary policy. C. Fiscal policy has proven to be too strong a medicine for the small economic fluctuations we have had. D. Concern about exchange-rate stabilization has limited its effectiveness.