An advantage of a flexible exchange rate system relative to a fixed system is that in a flexible rate system a. currency speculation will be reduced. b. balance of payments surpluses and deficits can be dealt with using fiscal policy, not monetary policy. c. inflation will be minimized by the “discipline of the balance of […]
Economic theory predicts that (a) market forces impose stiff penalties on profits whenever enterprises discriminate against individuals on any basis other than productivity. (b) government intervention is required to combat discrimination. (c) market mechanisms and government interventions are weak in addressing issues of discrimination. However, government is relatively stronger. (d) discrimination is a necessary part […]
Railroads (a) were among the last of the pre-1890 big businesses to be regulated. (b) were only subject to regulation by governments when the federal government stepped in with the Interstate Commerce Act of 1887. (c) were objects of regulation more than a decade before the Interstate Commerce Commission Act. (d) were never subject to […]
According to Keynes, the money demand function a. did not change as the return on other assets changed. b. changes with output. c. shifts with changes in the public confidence in the economy. d. both b and c. e. all of the above. ANSWER C
A piece of evidence in favor the Keynesian model would be that a. investment is very sensitive to changes in tax rates. b. changes in aggregate income cause changes in investment, but not vice versa. c. the aggregate price level is negatively correlated with income. d. all of the above. ANSWER B
The higher the exchange rate, the a. the lower the dollar cost of imported goods and the higher the demand for foreign exchange. b. higher the dollar cost of imported goods and the lower the demand for foreign exchange. c. higher both the dollar cost of imported goods and the demand for foreign exchange. d. […]
The type of commercial policy followed by England under the navigation laws (a) was followed throughout the 17th and 18th centuries but not by any governments today. (b) was followed throughout the 17th and 18th centuries and is still pursued, in one way or another, by all governments in the world today. (c) was followed […]
Fogel (1964) showed that railroad construction after the Civil War dominated the markets for which of the following? (a) Steel (b) Coal (c) Wood (d) None of the above ANSWER (d)
Since the 1980s, a. monetarism reached its peak. b. the influence of the monetarists and Keynesians both eroded. c. monetarism re-established itself with a stable money/income relationship. d. monetarism declined in influence as Keyesian thought overtook it in influence. ANSWER B
Buying securities on the margin requires people interested in buying stocks to pay only a percentage (a margin) of the actual purchase price. The rest is borrowed from someone else, usually an investor’s broker. Indicate whether the statement is true or false ANSWER TRUE
