Which of the following was NOT considered to have been a drawback of the pre-1914 gold standard?
A) It sometimes led to inflation, which several times in the late nineteenth century caused recessions in the United States.
B) Countries had little control over their domestic monetary policies.
C) Countries with trade deficits experienced deflation.
D) Changes in the world money supply were strongly influenced by gold discoveries.
A
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In economics, we assume rational decisions are made when individuals weigh:
A. the sunk costs versus the benefits of an action. B. the sunk costs versus the opportunity costs of an action. C. the opportunity costs versus the benefits of an action. D. the opportunity and sunk costs versus the benefits of an action.
Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has
a. less incentive to advertise than it would otherwise have. b. less market power than it would otherwise have. c. more control over the price of diamonds than it would otherwise have. d. higher profits than it would otherwise have.
The intertemporal substitution effect refers to substitution of
A) goods for services. B) goods and services for less expensive goods and services. C) goods and services today for goods and services in the future. D) goods and services produced domestically for goods and services produced in another country.
Based on the theory of the expectations-augmented Phillips curve, if the expected inflation rate is 2%, the short-run Phillips curve will
A) have a kink at an inflation rate of 2%. B) be the same as the long-run Phillips curve. C) intersect the long-run Phillips curve at the natural unemployment rate, when the inflation rate is 2%. D) be horizontal at an expected inflation rate of 2%.