The balance of payments constraint refers to the limits on:
A. exchange rate policy imposed by flexible exchange rates.
B. currency convertibility observed in most developing countries.
C. domestic macroeconomic policy, arising from a shortage of international reserves.
D. macroeconomic policy resulting from IMF conditionality.
Answer: C
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The term "capitalism" refers to which of the following?
a. A religion based on amassing capital. b. An economic system characterized by private ownership of resources, and decentralized market allocation. c. An economic system characterized by government ownership of resources and centralized allocation. d. None of the above answers are correct.
According to the law of diminishing marginal returns, as more of a variable input is combined with fixed amounts of other resources:
a. the additions to output will eventually decrease. b. the additions to output cannot increase. c. total output will eventually decrease. d. the additions to output will eventually turn negative.
When we say the cost of living has gone up, we mean that, looking broadly over a range of goods and services:
A. a dollar buys more today than it used to buy. B. our income has increased to match the cost of those goods. C. a dollar buys the same today as it used to buy. D. a dollar buys less today than it used to buy.
The relationship Q = f(K, L) is an example of a
A) cost function. B) production function. C) demand equation. D) profit equation.