During a recession, rising transfer payments and falling tax collections
I. help cushion households from the impact of the recession.
II. buffers the fall in real GDP (relative to a situation where transfer payments do not rise and
tax revenues do not fall).
III. tend to increase a budget deficit or reduce a budget surplus.
A) I only
B) I and II only
C) II and III only
D) I, II, and III
Ans: D) I, II, and III
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If the expected future exchange rate decreases, then the supply of dollars ________ and the demand for dollars ________
A) increases; increases B) decreases; increases C) increases; decreases D) decreases; decreases E) does not change; does not change
In determining the exchange rate between U.S. dollars and Swiss francs, all of the following are assumed constant along the supply curve for francs except one. Which is not assumed constant?
a. U.S. interest rates b. Swiss income c. expected rates of inflation in the United States d. expected rates of inflation in Switzerland e. the price of the Swiss franc
In economics, man-made resources such as tools, equipment, and structures that are used to produce other goods and services are referred to as
a. consumer goods. b. capital. c. marginal goods. d. infrastructures.
In the countries that have adopted inflation targeting, the inflation rate has typically
A) increased. B) decreased. C) decreased to zero. D) not changed.