What are menu costs?
A) the full list of a firm's costs of production
B) the costs to a firm of changing prices
C) the cost to a household of borrowing money when there is deflation
D) the opportunity cost of dining in a restaurant instead of at home
Answer: B
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The government of Youland increased its spending by $100 billion. However, the corresponding change in output was much smaller than that predicted by the government expenditure multiplier. This occurs due to ________
A) crowding out B) a liquidity crisis C) the internalization of an externality D) quantitative easing
Import quotas are less damaging to an economy than are tariffs
Indicate whether the statement is true or false
The legal system in the United States tends
A. to actively discourage unionization. B. to promote competition. C. to support monopolies. D. to discourage the entry of new firms into industries.
Consider that Britain is trying to maintain a fixed exchange rate with respect to the U.S. dollar. However, the present situation in the foreign exchange market is conducive for the British pound to depreciate with respect to the U.S. dollar. Which of the following interventions will stem the pressures for depreciation of the pound?
A. The government of Britain should increase the country's money supply. B. The government of Britain should sell pounds and buy dollars. C. The government of Britain should do nothing, as a fixed rate cannot change. D. The government of Britain should buy pounds and sell dollars.