Expansionary fiscal policy in an open economy has a
a. greater effect than in a closed economy.
b. similar effect in a closed economy.
c. smaller effect than in a closed economy.
d. greater effect than monetary policy.
c
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The Federal Reserve cannot target both the money supply and the interest rate because it does not control
A) bank reserves. B) open market operations. C) money demand. D) the discount rate.
Natural monopoly exists when
a. marginal costs are less than average costs for all output levels b. average costs are less than marginal costs for all output levels c. profit is impossible for a private firm d. efficient production is impossible for a private firm e. none of the above
Did the 1957 Treaty of Rome turn the EU into a truly unified market?
A) Yes, it paved the way for the current EMU. B) No, although it established a customs union, it failed to remove barriers to the movement of goods and factors within Europe. C) No, it was only after the German unification and locating the ECB in Frankfurt that unity was achieved. D) No, since the Northern members of the EU had larger endowments of capital and skilled labor. E) No, the Treaty of Rome created more trade barriers between European countries.
Which of the following is NOT a disadvantage of exchange-rate targeting?
A) It relies on a stable money-inflation relationship. B) The targeting country gives up an independent monetary policy. C) The targeting country is left open for a speculative attack. D) It can weaken the accountability of policymakers.