Suppose that after five solid years of economic growth, Eurekaland begins to experience inflationary pressures due to strong consumer and investor confidence. If Eurekaland's Central Bank wants to prevent inflation from becoming a major problem, which of the following actions should it take?
A) It should reduce the money supply to push interest rates higher.
B) It should increase the money supply to push interest rates higher.
C) It should reduce the money supply to push interest rates lower.
D) It should increase the money supply to push interest rates lower.
Ans: C) It should reduce the money supply to push interest rates lower.
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When the price elasticity of demand for a good equals
A) 0, the demand curve is vertical. B) 0, the demand curve is horizontal. C) 1, the demand curve is vertical. D) 1, the demand curve is horizontal.
In Figure 4-6 above, with IS0 shifting to IS1 against the upward-sloping LM curve, crowding-out is the result that
A) income stays at YO3. B) income rises to Y1 instead of to Y2. C) income rises to Y1 instead of staying at YO3. D) income rises to Y2 instead of to Y1.
The expected marginal benefit to you from purchasing a new sport utility vehicle is $20,000 . The price of the new sport utility vehicle is $22,000. a. If you are acting rationally, you will borrow $2,000 and purchase a new sport utility vehicle
b. You will not purchase the new sport utility vehicle at this time if you are acting rationally. c. If you do not purchase the new sport utility vehicle, your net loss will be $2,000. d. If you are acting rationally, you will purchase sport utility vehicles until the marginal cost of doing so falls to $20,000.
What is MFN status? How does the WTO reconcile the principle of equal treatment with the preferential treatment created by regional trade agreements?
What will be an ideal response?