On a graph with x on the horizontal axis and y on the vertical axis, the origin is
a. the point where x = 0 and y = 0
b. any point where x = 0
c. any point where y = 0
d. where a curve intersects the vertical axis
e. where a curve intersects the horizontal axis
A
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In a properly functioning economy, money costs approximate opportunity costs.
Answer the following statement true (T) or false (F)
The reason why public subsidization of industries in less-developed countries causes slow economic growth is that:
a. when companies face no competition, there is no incentive for them to improve their production. b. too much of the taxpayer's money is spent in these programs. c. consumers tend to develop an aversion for the purchase of subsidized goods and services. d. subsidies tend to create too much competition for products. e. subsidization creates shortage in the product market.
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
For this question, assume the Marshal-Lerner condition holds. Which of the following would occur as a result of an increase in the real exchange rate?
A) an improvement of the trade balance B) a reduction in the quantity of imports C) an increase in domestic output D) all of the above E) none of the above