When a country operates with a currency board, the central bank's sole objective is to:
A. maintain the exchange rate.
B. maintain the domestic interest rate.
C. maintain the target inflation rate.
D. focus on domestic monetary policy.
Answer: C
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Which one of the following is not an example of final goods in national income accounting?
A. Desktop computer purchased by an executive for business use B. Tractor purchased by a construction company C. Lumber and steel beams purchased by a construction company D. Laptop computer purchased by an executive for personal use
The figure above gives your budget line for magazine and CDs per month. Given that your income equals $60 per month, what is your real income in terms of magazines?
A) 12 magazines B) 6 magazines C) 2 magazines D) $60/month
If households experienced greater uncertainty about their economic future, which of the following would occur in the market for loanable funds?
a. Both the supply and demand for funds would increase, lowering the interest rate and raising investment spending. b. The supply of funds would decrease, raising the interest rate and lowering investment spending. c. The supply of funds would decrease, lowering both the interest rate and investment spending. d. The supply of funds would increase, lowering both the interest rate and investment spending. e. The supply of funds would increase, lowering the interest rate and raising investment spending.
Suppose John is a conservative and the economy is in a recession. Which fiscal policy does he recommend?
a. increase taxes b. decrease taxes c. increase G spending d. decrease G spending e. increase the money supply