An increase in the demand for computers leads to an increase in demand for computer programmers. This situation arises because:
A. programmers minimize the costs of production.
B. the supply of programmers has decreased.
C. the demand for programmers is a derived demand.
D. of producer sovereignty in resource markets.
Ans: C. the demand for programmers is a derived demand.
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
Fractional reserve banking refers to a system where banks
A. deposit a fraction of their reserves at the central bank. B. accept a portion of their deposits in checkable accounts. C. grant loans to their borrowing customers. D. hold only a fraction of their deposits in their reserves.
The view that excessive growth of the money supply over long periods leads to inflation:
A. is accepted by the monetarists but not by mainstream macroeconomists. B. is the main contribution of the rational expectations theory. C. had been absorbed into the mainstream of macroeconomics. D. is known as the monetary rule.
In general, for any two countries, there are many exchange rates that will lead to gains from trade, based on comparative advantage.
Answer the following statement true (T) or false (F)