Because government bodies have the power to make up for inadequate supply of a good:
A. it can be efficiency enhancing in markets for public goods.
B. they have incentive to compete with local businesses.
C. its presence as a producer is in virtually every market.
D. None of these statements is true.
Answer: A
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The quantity theory of money:
A) assumes that the ratio of money supply to nominal GDP decreases over time. B) assumes that the ratio of money supply to nominal GDP increases over time. C) is a representation of how a change in money supply affects the price level in an economy. D) is an exact representation of how the economy behaves in the long-run.
A teenager plays his radio loudly at the beach. What can we conclude?
A) He creates a negative externality if it unintentionally annoys or upsets others. B) He creates a positive externality if it unintentionally benefits others who enjoy the same music. C) He creates no externality, if others remain unaffected by the music. D) All of the above.
Because the value of the euro is determined by factors that affect the entire euro zone, during the recession of 2007-2009, individual countries using the euro
A) were able to use expansionary monetary policy to lessen the impact of the recession. B) were unable to have their exchange rates depreciate. C) were more insulated from unemployment increases than most countries. D) experienced a greater increase in exports than did most countries.
An increase in the real exchange rate will tend to ________ exports and to ________ imports.
A. increase; increase B. decrease; increase C. increase; decrease D. decrease; decrease