The indifference curves for right shoes and left shoes will be:
A. L-shaped.
B. convex.
C. a straight line with positive slope.
D. a straight line with negative slope.
Answer: A
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
Policy independence for the Federal Reserve is logically similar to allowing the ________
A) National Oceanographic and Atmospheric Administration to select the nation's weather B) Congressional Budget Office to estimate the government's expenditures C) individual states to set highway speed limits D) Social Security Administration to determine benefit levels and eligibility requirements
A fixed exchange rate
a. is a declared rate that is maintained by central bank intervention in the foreign exchange market b. is a rate that is fixed by the forces of supply and demand c. is a rate that is determined by trilateral arbitrage d. "fixes" the value of a nation's price level e. is a mechanism for eliminating a trade deficit
If a country’s production possibilities curve gets more bowed out over time, it is an indication that
A) technological change has taken place. B) society is learning to use its resources more efficiently. C) the quantity of labor and capital have increased. D) resources have become more highly specialized.