Which of the following statements is true of a country that has a gold standard exchange rate system?
A. A country running a deficit in its balance of payment would experience an outflow of gold which would force it to increase the price of gold.
B. A country running a deficit in its balance of payment would experience an outflow of gold which would force it to decrease the price of gold.
C. A country running a deficit in its balance of payment would experience an outflow of gold which would force it to reduce its money supply.
D. A country running a deficit in its balance of payment would experience an outflow of gold which would force it to increase its money supply.
Answer: C. A country running a deficit in its balance of payment would experience an outflow of gold which would force it to reduce its money supply.
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“Assume that all individuals have perfect information about prices now and in the future, that they have identical tastes, that all markets are competitive, and that there is no government." This statement is an example of how economists
A. apply the law of supply and demand. B. employ marginal analysis. C. are prevented from getting correct answers. D. ignore reality. E. use unrealistic assumptions to develop theory.
Free riders often result in
A. overallocation of resources. B. competitive markets. C. scarcity of time. D. market failure.
In general, individuals and nations should specialize in producing goods ________ other individuals or nations.
A. that they can produce more quickly than B. that they can produce less quickly than C. for which they have a higher opportunity cost compared to D. for which they have a lower opportunity cost compared to
In the long run, the shape of the aggregate supply curve is
a) upward-sloping, because output can be increased only at higher costs b) horizontal, because all inputs are variable c) horizontal, because markets become perfectly competitive d) vertical, because further expansion of output is unprofitable, regardless of prices e) downward-sloping, because firms must ultimately charge lower prices in order to sell more output