If an economy has a flexible exchange rate and it chooses to issue $10 million in bonds, what will happen according to the Monetary approach?
A) It will have to allow its currency to appreciate.
B) It will have to allow its currency to depreciate.
C) It will have to decrease its foreign exchange reserves.
D) It will have to increase its foreign exchange reserves.
A
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Which of the following is TRUE about how trade deficits and government budget deficits are related?
A) The government budget deficit leads to higher interest rates that will lead to a trade deficit. B) The government budget deficit leads to lower interest rates that will lead to a lower trade deficit. C) The trade deficit leads to a reduction in investment that leads to a government budget deficit. D) The trade deficit leads to a decline in imports relative to exports that leads to a government budget deficit.
Suppose the demand for peanuts increases. What will happen to producer surplus in the market for peanuts?
a. It increases. b. It decreases. c. It remains unchanged. d. It may increase, decrease, or remain unchanged.
If Les can produce two pairs of pants per hour while Eva can produce one pair per hour, then it must be true that:
A. Les has a comparative advantage in producing pants. B. Les has an absolute advantage in producing pants. C. Les has both comparative and absolute advantage in producing pants. D. Eva has a comparative advantage in producing pants.
If aggregate production in the economy exceeds aggregate purchases
A. firms are producing more during the year than they are selling. B. unintended inventory investment is negative. C. the economy is operating at a real GDP greater than equilibrium GDP. D. saving must be negative.