Which of the following statements is true?
A. International capital-flow shocks have domestic effects under fixed exchange rates but not under floating exchange rates.
B. A domestic monetary shock is less disruptive with floating exchange rates.
C. With floating exchange rates, the transmission of business cycles through foreign trade and repercussion is less than with fixed exchange rates.
D. If foreign capital is highly responsive to changes in interest rates, then domestic spending shocks are less disruptive with fixed exchange rates.
Answer: C
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Answer the next question using the following budget information for a hypothetical economy. All data are in billions of dollars. Government SpendingTax RevenuesGDPYear 1$800$825$4,000Year 28508504,200Year 39008754,350Year 49509004,500Year 51,0009254,600In which year is there a budget surplus?
A. Year 1 B. Year 2 C. Year 4 D. Year 5
When the percentage change in the quantity supplied is less than the percentage change in price, the supply is
A) elastic. B) inelastic. C) unit elastic. D) perfectly unit elastic. E) perfectly elastic.
Which of the following is not a bargaining advantage enjoyed by bureau's?
a. They only have one legislature to deal with so bureaus are quite experienced in extracting a favorable budget agreement. b. The legislature typically gets all information on the bureau from the bureau itself. c. The bureaus have the ability to go out and hire the best negotiators while members of the legislature are the fixed negotiators on the other side. d. Considerable bargaining occurs in committees comprised of high demanders of the output of the bureaucracy.
A good example of central planning at work in the U.S. is:
A. McDonald's fries being the same everywhere. B. unions working with businesses to establish wages. C. New York City's rent control program. D. car manufacturers establishing suggested retail prices.