All else equal, compared to the case of a closed economy, monetary policy is ________ effective in an open economy with a ________ exchange rate.
A. more; flexible
B. less; nominal
C. less; real
D. more; fixed
Answer: A
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If the risk associated with a particular outcome is ________, or the value of a particular outcome is ________, then cost-benefit analysis might lead people to take precautions that are not cost-justified
A) overestimated, overestimated B) overestimated; underestimated C) underestimated; overestimated D) underestimated; underestimated
If a policy helps some but harms others
A) the result is a Pareto improvement for the people who are helped. B) then the cost-benefit analysis will show a net increase in surplus and is therefore desirable. C) we cannot use the Pareto principle to evaluate whether or not the policy is desirable. D) it is too hard to determine whether or not the outcome is desirable.
Since 1970, real GDP ___ in most years.
A. fell B. stayed the same C. rose
Anything that has alternative uses has an opportunity cost and is, therefore, scarce.
a. true b. false