The income and substitution effects move in ________ for lenders and in ________ for borrowers
A) the same direction; the same direction
B) the same direction; opposite directions
C) opposite directions; the same direction
D) opposite directions; opposite directions
C
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Wages in Baltonia are downwardly rigid. Which of the following will happen if a recession occurs in the country?
A) Employment will fall less than if wages were flexible. B) Unemployment will fall less than if wages were flexible. C) Employment will fall more than if wages were flexible. D) Unemployment will fall more than if wages were flexible.
An argument in favor of 100 percent reserve banking is that
A) a bank deposit is owned by the depositor, so the bank has no legal right to lend the deposit to someone else. B) banks should be allowed to lend deposits in order to increase their profits and strengthen the banking system. C) unregulated institutions would be riskier than regulated fractional-reserve banks. D) it would limit the precision of the central bank's control over the quantity of money.
The U.S. work week has declined from 60 hours in 1890 to 40 hours today. The impact of the decline in working hours
A) increases U.S. GDP and increases the well-being of a typical working person in the U.S. B) increases U.S. GDP and decreases the well-being of a typical working person in the U.S. C) decreases U.S. GDP and decreases the well-being of a typical working person in the U.S. D) decreases U.S. GDP and increases the well-being of a typical working person in the U.S.
To maintain a fixed exchange rate, the government can use the following tools, except:
A. Currency market intervention B. Controlling the flow of trade through various barriers C. Rationing of foreign exchange D. Keeping its level of international reserves strictly fixed