Under the Bretton Woods system, a country with a balance of payments deficit
A. could get loans from the U.S. government.
B. could devalue if deflationary policies failed to eliminate the deficit.
C. was not allowed to devalue under any circumstance.
D. was required to devalue its currency immediately.
Answer: B
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Consider a price ceiling imposed on a monopoly that is set below the competitive price. Design a diagram showing the monopoly equilibrium in this case. Use your diagram to show that a price ceiling set this low will create a shortage.
What will be an ideal response?
What is the relationship between net exports, the government sector surplus or deficit, and the private sector surplus or deficit?
What will be an ideal response?
When price is less than average variable cost at the profit-maximizing level of output, a firm should:
A) continue to produce the level of output at which marginal revenue equals marginal cost if it is operating in the short run. B) continue to produce the level of output at which marginal revenue equals marginal cost if it is operating in the long run. C) shutdown, because it will lose nothing in that case. D) shutdown, because it cannot even cover all of its variable costs let alone its fixed costs if it stays in business.
If the quantity of goods and services produced in the economy decreases
A) it may be possible for real GDP to increase. B) real GDP would certainly increase. C) it may be possible for nominal GDP to increase. D) nominal GDP would certainly increase.