From Elizabeth I to George III, England strongly influenced the institutional structure of colonial America. This influence is realized today on which of the following fronts? (a) Private property rights (b) The role of international trade and finance in the U.S. economy (c) Population growth through immigration (d) All of the above ANSWER (d)
Assume that there is an increase in perceived bankruptcy risk. As a result of this we would expect to see a. income and interest rates to rise. b. money demand and interest rates to fall. c. money demand and interest rates to rise. d. money supply to rise and interest rates to fall.Figure 7-1 […]
Which of the following shocks have been emphasized most often with respect to real business cycle theory? a. Shocks to technology b. Variations in environmental conditions c. Changes in the real (relative) prices of imported raw materials d. Changes in tax rates e. None of the above ANSWER A
If the central bank targets the money stock, then a negative shock to money demand will a. shift the LM schedule to the right and income will rise above the target level. b. shift the LM schedule up and income will fall below the target level. c. not shift the LM schedule and, therefore, will […]
What does the Classical model predict about the relationship between a country’s budget balance (total revenue minus total spending) and a country’s level of real interest rates and investment in a closed economy? Use a graph of the capital market to illustrate. ANSWER A higher budget deficit shifts the I+(G-T) curve to the right, […]
The tax multiplier is most likely to be larger than the expenditure multiplier when ________. A) monetary policy is at the zero lower bound B) rising inflation causes the real interest rate to decline C) when the change in tax revenue is large relative to the change in government purchases D) the expansionary fiscal policy […]
By referring to Figure 7-1, an increase in the money stock a. shifts the LM schedule to the right from LM0 to LM1. b. shifts the LM schedule to the left from LM0 to LM2. c. leaves the LM curve unchanged at LM0. d. shifts neither the IS nor the LM schedule. ANSWER A
In the new Keynesian models, a. imperfect competition comes is the result of optimizing behavior by individuals. b. perfect competition is assumed with respect to the product market c. a natural monopoly is presumed for the product market. d. both a and c. d. None of the above ANSWER A
American economic history is important because it will help you understand (a) how to change strategically the course of the future since it was shaped by the past. (b) why some armies failed and others succeeded. (c) how to change the past. (d) how to produce the exact same type of successful growth and development […]
An export industry is said to exhibit increasing returns to scale when (a) a large-scale organization has significant competitive advantages over small-scale activities. (b) labor utilization increases by 50 percent but export output production increases by only 20 percent. (c) its small-scale business activity has significant comparative advantages over large-scale productions. (d) use of capital […]
