When the economy is not producing at capacity, economic policies are
A. ineffective at changing output.
B. effective at changing output.
C. unrelated to output.
D. none of the above.
Answer: B
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Assume that a fixed exchange rate is overvalued. Describe the situation of a speculative crisis against this currency. What can the central bank do to defend the currency? Why might the alternative of devaluation be preferable?
What will be an ideal response?
Any item that serves as a medium of exchange is called
A) gold. B) capital. C) silver. D) money.
If quantity supplied is less at each price, we say that there has been
A. an increase in supply. B. an increase in demand. C. a decrease in supply. D. a decrease in demand.
Which of the following statements is TRUE about the planning horizon?
A. All inputs are fixed. B. All inputs are variable. C. Costs do not exist. D. There are fixed and variable inputs.