Which of the following illustrates the economic inefficiencies of government regulation? (a) Railroad rate increases are set by a government agency and these increases fall below increases in repair and depreciation costs but railroad passengers are satisfied. (b) Competitive railroad rates are determined by the buying and selling actions of those in the railroad industry. […]
Targeting money growth will lead to stable output growth only if a. money demand and velocity change proportionally with output. b. fiscal policy remains unchanged. c. money demand and velocity are stable. d. the IS curve is steep. ANSWER C
According to the Monetarists, the real effect of monetary policy on output is a. long-lasting and unpredictable. b. predictable and beneficial. c. nonexistent in the short run. d. always less than fiscal policy ANSWER A
The exchange rate between the dollar and the euro is a. the price of European goods relative to U.S. goods. b. the price of U.S. goods relative to European goods. c. the number of euros you get for lending one dollar to a European for a year. d. the number of euros you get for […]
Which of the following are advantages of greater exchange rate flexibility? a. The alleviation of potential conflicts that arise between the internal balance and the external balance. b. The insulation of the domestic economy from economic shocks. c. An expansion abroad would have contractionary effects on the domestic economy. d. Both a and b e. […]
Capital deepening occurs when a. the per capita income increases over time. b. real GNP increases over time. c. the capital/labor ratio does not change. d. the capital/labor ratio increases over time. ANSWER D
Convergence refers to the idea that cross-country a. growth rates will become more similar over time. b. unemployment rates will become more similar over time. c. per-capita income levels will become more similar over time. d. total income levels will become more similar over time. e. none of the above. ANSWER C
Why was the stock market crash of 1929 a disaster for the economy? (a) Through the “wealth effect,” investors lost paper wealth and consequently reduced their spending on goods and services. This led to cutbacks in production and jobs. (b) Businessmen became pessimistic about the future and reduced spending on plants and equipment, thus causing […]
Low-wage manufacturing industries exhibit which of the following? (a) Low output per worker (b) Added value that rises above labor’s share of total employment (c) Highly educated and skilled workers (d) All of the above ANSWER (a)
Between 1929 and 1982, according to Edward Denison, approximately a. one-fourth of the growth in output was due to the increase in the quantity of labor. b. one-third of the growth in output came from an increase in the quantity of labor. c. forty-five percent of the growth in output was credited to an increase […]
