The buying and selling of foreign currency by the central bank is a trade policy whose objective is:
A. reducing purchases of assets abroad.
B. stabilizing the exchange rate against external shocks.
C. stabilizing the interest rate against foreign capital outflows.
D. promoting long term economic growth.
Answer: B
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Government expenditures are defined as
A) government spending on goods and services plus transfer payments. B) the excess of total expenditures over total revenues. C) the sum of all past borrowing by the government. D) the excess of total revenues over total expenditures.
The natural rate hypothesis states that when the inflation rate
A) increases, the unemployment rate will decrease permanently. B) changes, the unemployment rate changes temporarily and eventually returns to the natural unemployment rate. C) decreases, the inflation rate will decrease permanently. D) changes, the change is only temporary, and eventually the inflation rate returns to the natural inflation rate. E) increases, the natural unemployment rate increases.
Assuming seigniorage equals zero, the federal debt is ________ and the budget deficit is ________
A) a flow variable representing the total value of government bonds outstanding; a stock variable representing the yearly increase in value of newly issued government bonds B) a stock variable representing the total value of government bonds outstanding; a flow variable representing the yearly increase in value of newly issued government bonds C) a flow variable representing the yearly increase in value of newly issued government bonds; a stock variable representing the total value of government bonds outstanding D) a stock variable representing the yearly increase in value of newly issued government bonds; a flow variable representing the total value of government bonds outstanding
Adam Smith (1776) claimed that less governmental regulation, not more, would provide incentives for individuals to allocate resources efficiently, specialize and trade
Specialization and trade would generate wealth and result in economic growth and development. Indicate whether the statement is true or false