In open economies
A) saving and investment are necessarily equal.
B) as in a closed economy, saving and investment are not necessarily equal.
C) saving and investment are not necessarily equal as they are in a closed economy.
D) saving and investment are necessarily equal contrary to the case of a closed economy.
E) investment always refers to the domestic stock market.
C
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The degree to which the public believes the central bank's announcements about future policy is its
A) reputation. B) transparency. C) openness. D) credibility.
The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
If the government increases spending while holding taxes constant, we expect
A) a decrease in real saving as consumers follow suit and also increase borrowing. B) planned real investment spending by businesses to increase. C) an increase in investment spending by businesses too, as they anticipate future economic growth. D) interest rates to rise.
In the figure above, a decrease in the monetary base would create a change such as a
A) movement from point a to point b along the supply of money curve MS0. B) movement from point b to point a along the supply of money curve MS0. C) shift from the supply of money curve MS0 to the supply of money curve MS1. D) shift from the supply of money curve MS1 to the supply of money curve MS0.