When loans are repaid at commercial banks
A. the assets of commercial banks increase.
B. money is destroyed.
C. money is created.
D. the net worth of commercial banks increases.
Answer: B
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
In the Mundell-Fleming model, the exogenous variables are
a. government spending, taxes, and income. b. the exchange rate and the price level. c. the price level, the world interest rate, monetary policy, and fiscal policy. d. the world interest rate, the price level, and the exchange rate. e. none of the above.
"External economies" derive from all of the following except
(a) the joint use of transportation facilities. (b) labor force concentrations in urban areas. (c) social overhead facilities such as police and fire protection. (d) economies of management associated with large firms.
When imports of goods exceed exports of goods, the financial account shows a deficit
a. True b. False Indicate whether the statement is true or false