Explain why foreign trade imbalances do not always create problems
To the extent that a country imports industrial and agricultural machinery, capital growth can occur that
will potentially allow the economy to expand its export markets, eventually correcting the trade imbalance.
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In the long run, a firm has
A) no factors of production that are fixed. B) no factors of production that are variable. C) no factors of production that are either fixed or variable. D) fixed factors of production but no variable resources.
The classical theory of inflation:
A. describes a long-run equilibrium. B. explains the direct relationship between money supply and the price level. C. shows neutrality of money in the long run. D. All of these statements are true.
In response to the sharp decline in stock prices in October 1987, the Federal Reserve
a. increased the money supply and increased interest rates. b. increased the money supply and decreased interest rates. c. decreased the money supply and increased interest rates. d. decreased the money supply and decreased interest rates.
The purpose of a production possibilities graph is to:
a) enable a country to mobilize to win a war b) keep an economy from having nonproductive workers c) show alternative ways to use an economy's resources d) make it possible to increase an economy's output