Which of the following industrial policies are effective for developing countries to deal with inflows of capital from overseas?
A. Market Substitution, government subsidy, and crowding out.
B. Import substitution, export-led growth, and crowding out.
C. Import substitution, government subsidy, and clustering.
D. Import substitution, export-led growth, and clustering.
Answer: D
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Suppose that the interest rate is so low that banks currently refuse to make loans. An increase in the supply of high-powered money will
A) have no effect on the money supply if all the new high-powered money ends up as bank reserves. B) have no effect on the money supply if all the new high-powered money ends up as cash in the hands of the nonbank public. C) raise the money supply depending on banks reserve-holding ratio. D) All of the above are correct.
When faced with a continual excess demand for foreign exchange, which of the following options can the government choose to eliminate the disequilibrium situation?
a. increase the peg or devalue b. engage in fiscal policy and raise the country's income level c. engage in monetary policy and lower interest rates d. increase the inflation rate e. decrease the peg or revalue
Compared to stockholders, bondholders
a. face greater risk b. face the same risk c. face lower risk d. always receive a higher return on their investment e. always receive a lower return on their investment
The demand for good X is given by ln Qxd = 120 ? 0.9 ln Px + 1.5 ln Py ? 0.7 ln M. Which of the following statements is correct?
A. An economic downturn will decrease demand for X. B. X has constant income elasticity. C. X has a constant income elasticity, and an economic downturn will decrease the demand for X. D. A 15 percent increase in income would increase demand for X by 10.5 percent.