Refer to the information provided in Figure 29.1 below to answer the question(s) that follow.
Figure 29.1Refer to Figure 29.1. If policy makers decide on a policy at Point t4 but it does not affect the economy until period t7, then the policy choice is likely to be
A. automatically stabilizing.
B. optimal.
C. stabilizing.
D. destabilizing.
Answer: D
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If the government removes a binding price floor from a market, then the price received by sellers will
a. decrease, and the quantity exchanged in the market will decrease. b. decrease, and the quantity exchanged in the market will increase. c. increase, and the quantity exchanged in the market will decrease. d. increase, and the quantity exchanged in the market will increase.
Unlike perfectly competitive firms, monopolists can control
a. how much of the good to produce b. what inputs to use in production c. its plant size d. the price charged per unit of output e. the quality of inputs used in production
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. Real GDP rises, and nominal value of the domestic currency rises. b. Real GDP rises, and nominal value of the domestic currency falls. c. Real GDP rises, and nominal value of the domestic currency remains the same. d. Real GDP falls, and nominal value of the domestic currency rises. e. There is not enough information to determine what happens to these two macroeconomic variables.
In March of 2014, China's official holdings of foreign exchange reserves
A. rose to $4 trillion. B. fell to $2 trillion. C. rose to almost $7 trillion. D. fell to below $1 trillion.