If the economy experiences an inflationary gap, a contractionary monetary policy will
A) increase real GDP and increase the price level.
B) increase real GDP and decrease the price level.
C) decrease real GDP and increase the price level.
D) decrease real GDP and decrease the price level.
Ans: D) decrease real GDP and decrease the price level.
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Explain why each of the following is not a valid argument for protection
(a) patriotism (b) fair play (e.g. level international playing fields) (c) preservation of jobs
The World Trade Organization (WTO) is an international organization designed to:
A. monitor and enforce trade agreements, while also promoting free trade. B. monitor and enforce world banking policies, and lending between nations. C. provide a forum for all nations to have discussion on various international issues of concern. D. international governing body that is the final arbiter of all world trade.
Lunch in Jamie's dorm is an all-you-can-eat buffet, served from 11 a.m. until 1 p.m. By noon, the buffet is picked over, and by 12:30, there are very few popular items left. The garbage bins, though, are full of food. If the cafeteria changed its policy so that students had to pay for each item chosen, students would:
A. encounter shortages earlier in the day. B. select only the most expensive items in the buffet. C. make the same selections as before, but eat more of what they select. D. only select an item if its marginal benefit is greater than or equal to its price.
What are the primary effects of cost-push inflation?
A. It raises real output but redistributes a decreased level of real income. B. It raises real output and redistributes an increased level of real income. C. It reduces real output and redistributes a decreased level of real income. D. It reduces real output but redistributes an increased level of real income.