Because the United States is highly integrated with the international capital market, international capital flows tend to
A. counteract the negative effect on aggregate demand of lower interest rates.
B. counteract the positive effect on aggregate demand of higher interest rates.
C. strengthen the negative effects on aggregate demand of higher interest rates.
D. strengthen the negative effects on aggregate demand of lower interest rates.
Answer: C
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If the technology associated with producing fiber-optic cable continues to advance, over time the cost of producing fiber-optic cable will
A) decrease, firms that use the new technology will make an economic profit, and in the long run new firms will enter the market. B) decrease, firms that use the new technology will incur an economic loss, and in the long run some firms will exit the industry. C) increase, firms that use the new technology will make an economic profit, and in the long run new firms will enter the market. D) increase, firms that use the new technology will incur an economic loss, and in the long run some firms will exit the industry. E) decrease, firms that do not use the new technology will make an economic profit, and in the long run new firms will enter the market.
Members of Congress are able to influence monetary policy, albeit indirectly, through their ability to
A) withhold appropriations from the Board of Governors. B) withhold appropriations from the Federal Open Market Committee. C) propose legislation that would force the Fed to submit budget requests to Congress, as must other government agencies. D) instruct the General Accounting Office to audit the foreign exchange market functions of the Federal Reserve.
What are the effects of a financial crisis on short-run aggregate supply? How might long-run aggregate supply be affected?
What will be an ideal response?
Suppose Congress decides to reduce government expenditures by reducing its purchases of weapons systems. Which of the following would you expect to occur as a result of this change? a. The economy will move up and to the left along the short-run Phillips Curve. b. The economy will move down and to the right along the short-run Phillips Curve. c. The short-run Phillips Curve will shift to the
left. d. The short-run Phillips Curve will shift to the right.