Refer to the scenario above. Which of the following is true if the car dealer has a reputation of trustworthiness?
A) The equilibrium outcome is equitable.
B) There is no unique equilibrium.
C) There are multiple equilibria.
D) The equilibrium is socially efficient.
D
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If the cross elasticity of demand is negative, that means the goods
A) have elastic demands. B) have inelastic demands. C) are complements. D) are substitutes. E) are inferior.
Which of the following is an example of foreign direct investment?
A) American Airlines builds a hub in China. B) A stock broker from China sells you a Chinese government savings bond. C) You buy a plane that was made in China. D) You purchase a plane ticket to China on American Airlines.
Discretionary fiscal policy is best described as
A) a deliberate attempt to cause the economy to move to full employment and price stability more quickly than it might otherwise. B) a deliberate attempt to improve the functioning of free markets. C) an automatic change in income transfer payments to keep the economy at full employment. D) the design of a tax system that automatically stabilizes economic activity over time.
In actual practice, does the Fed monetize the debt?
A. No, it did not do so even with large deficits in the 1980s and early 2000s. B. No longer, although it monetized much of the deficit in the 1980s. C. Yes, although it monetizes less now than in the 1980s. D. Yes, it has monetized the deficit steadily since the early 1970s.