Classical economists believe that an increase in the money supply will lead to:
a. only c and d.
b. all of the following.
c. an increase in the price level.
d. an increase in nominal GDP.
e. an increase in real GDP.
a
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Suppose the Federal Reserve lowers the federal funds rate. Put the following changes in order in which they occur, starting with the changes that take place almost immediately and ending with the changes that may occur up to a year afterwards:
i. Quantity of money increases. ii. Quantity of reserves increases. iii. Aggregate demand increases. iv. The long-term real interest rate falls. A) ii-i-iv-iii B) i-ii-iii-iv C) i-ii-iv-iii D) ii-i-iii-iv E) iii-iv-i-ii
Corporations in the United States spend a lot of money to familiarize management with global markets. This should
A. Move the economy from a point on the production possibilities curve to a point inside it. B. Have no effect on the economy's production possibilities curve. C. Shift the economy's production possibilities curve inward. D. Shift the economy's production possibilities curve outward.
A depreciation of a nation's currency is
A) a situation in which exchange rates are allowed to fluctuate in the open market in response to changes in supply and demand. B) the increase in the exchange value of one nation's currency in terms of an other nation. C) a nation in which households, firms, and governments buy and sell national currencies. D) the decrease in the exchange value of one nation's currency in terms of another nation.
Answer the following questions true (T) or false (F)
1. Suppose the government mandates the installation of a certain type of pollution abatement equipment for the leather tannery industry. For some firms in the industry, installing this equipment may not be the most cost effective method of reducing pollution. 2. When the government imposes a tax equal to the external cost of producing a product that causes pollution, the government is said to externalize the externality. 3. A.C. Pigou argued that the government can deal with a positive externality in consumption by giving consumers a subsidy equal to the value of the externality.