A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock.
B. long-run demand shock.
C. long-run supply shock.
D. short-run demand shock.
Answer: A
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If a central bank does not want to see its currency ________ in value, it may pursue expansionary monetary policy to lower the domestic interest rate, thereby ________ its currency
A) fall; strengthening B) fall; weakening C) rise; strengthening D) rise; weakening
The school of engineering at a modern university would be a supporter of the new
a. consumption theory. b. growth theory. c. monetary theory. d. construction theory.
Stock market analysts often argue that lower interest rates are good for the stock market. Does this argument make sense?
a. No; lower interest rates will tend to slow down the economy, and this will be bad for the stock market. b. Yes; the lower rates of interest will increase the value of future income (and capital gains), and stock prices will rise to reflect this factor. c. No; the lower rates of interest will reduce the value of future income (and capital gains), and this will cause stock prices to fall. d. Yes; the lower interest rates will cause inflation, and inflation is generally good for the stock market.
The GDP per capita is the most practical way to
A. Measure how much income households receive. B. Make international comparisons of the standard of living. C. Measure how much output can be consumed on a sustainable basis. D. Analyze the growth rate of the economy through time.