The balance on the current account ____
a. d and e
b. c and d
c. will show a trade deficit or surplus, if one exists
d. must always be zero
e. multiplied by ?1 becomes the capital account
b
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Explain how the labor market and the production function determine potential GDP
What will be an ideal response?
If inflation is the major problem in the economy, which of the following would be an appropriate monetary policy response?
a. decreasing reserve requirements b. increasing the discount rate c. buying government bonds d. none of the above
Which of the following statements is true?
A. The speculative demand for money at possible interest rates gives the demand for money curve its upward slope. B. There is an inverse relationship between the quantity of money demanded and the interest rate. C. According to the quantity theory of money, any change in the money supply will have no effect on the price level. D. The transactions demand for money is used as an insurance agent against unexpected needs.
If total imports exceed total exports, other things being constant, then
A. net exports are negative. B. net exports are positive. C. GDP rises. D. investment rises.