When the euro falls in value relative to other currencies, then
A. European exports rise in price.
B. neither European exports nor imports rise in price.
C. both European exports and imports rise in price.
D. goods imported into Europe rise in price.
Answer: D
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The largest component of aggregate expenditure is _____
a. government purchases b. transfer payments c. imports d. consumption e. investment
The IMF offers loans to developing countries in times of balance of payment constraints, but the IMF also faces strong criticisms because:
A. contractionary fiscal policy and expansionary monetary policy tend to be ineffective against balance of payment constraints. B. contractionary fiscal and monetary policies are always undesirable for any developing country. C. it employs economists that know little about developing countries and their economic affairs. D. the conditions tend to be procyclical, therefore worsening the recessions.
When a liquidity trap situation exists, the most appropriate policy to increase output would be
A) a central bank sale of bonds. B) an increase in government spending. C) a central bank purchase of bonds. D) none of the above
An increase in the public debt and its subsequent repayment will tend to:
A. Mildly reduce the income inequality in the U.S. B. Mildly increase the income inequality in the U.S. C. Have no impact on the income distribution in the U.S. D. Make the income distribution more equitable in the U.S.