What does an unexpected decrease in the growth rate of the money supply do to inflation and unemployment in the short-run? What does it do to inflation and unemployment in the long run?
A decrease in the growth rate of the money supply decreases the inflation rate and raises unemployment in the short run. In the long run inflation is lower and unemployment returns to its natural rate.
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Refer to Figure 18.1. Mutually beneficial terms of trade between the United States and Canada are
A) 1 hang glider for 1/2 of a bicycle. B) 1 hang glider for 1/4 of a bicycle. C) 1 hang glider for 3 bicycles. D) 1 bicycle for 8 hang gliders.
Suppose in Belgium, the opportunity cost of producing a trombone is 8 clarinets. In Denmark, the opportunity cost of producing a trombone is 6 clarinets
a. What is the opportunity cost of producing a clarinet for Belgium? b. What is the opportunity cost of producing a clarinet for Denmark? c. Which country has a comparative advantage in the production of clarinets? d. Which country has a comparative advantage in the production of trombones?
One method for solving the adverse selection problem is
A) to restrict the ability of the party with information from taking advantage of hidden information. B) by having the government run all firms. C) to close down firms with bad reputations. D) All of the above.
Transactions costs are:
A. often cited as a reason why purchasing power parity doesn't hold. B. the time and energy involved with creating an exchange. C. usually higher when transactions take place internationally. D. All of these statements are true.