Market Clearing Price

16) I was thinking the answer was either B or E. When we say that a price in a competitive market is "too high to clear the market" we usually mean that (given upward-sloping supply curves): A) no producer can cover his costs of production at that price. B) the quantity supplied exceeds the quantity demanded at that ...continues

Philllips Curve

78. I picked A. What do you think? An economy can expect to move from one short-run Phillips curve to a lower short-run curve if: A) the rate of inertial inflation rises. B) worker's anticipations about inflation are diminished. C) the rate of unemployment is pushed above the NAIRU. D) fiscal policy increases a ...continues

How does Inflation benefit the gov't

76. Inflation benefits government in which of the following ways? A) Increases tax revenues through bracket-creep as nominal wage increases move wage-earners into higher tax brackets. B) Reduces the real rate of interest on government debt. C) Effectively devalues the currency, so that the government debt is paid ...continues

Value of the Dollar

63. A boycott of British goods by U.S. consumers might result in: A) a depreciation of the dollar relative to the pound. B) a depreciation of the pound relative to the dollar. C) an inflation of the domestic economy of Great Britain. D) another war in the colonies. E) none of the above.

US Dollar Value

65. If American prices drift upward somewhat more rapidly than prices in the other mixed economies, the probable result will be: A) exchange controls. B) tariffs or quotas. C) value-added subsidies to exports. D) gradual overvaluation of the dollar. E) a trend toward gradual depreciation of the dollar.

Unemployment & Inflation in the US

82.Hope you can answer this question even though you're in Canada. In the United States, during the last five years of the 20th century: A) both inflation and unemployment increased. B) both inflation and unemployment decreased. C) the economic data fit well with the short-run Phillips curve trade off. D) the ...continues

Inflation

81. If there are no demand or supply shocks: A) actual inflation should decline to near zero. B) actual inflation will decline below the expected rate. C) actual inflation will rise above the expected rate. D) actual inflation will be responsive only to changes in policy. E) actual inflation should remain at the ...continues

Keynesian Economics

84. According to the Keynesian view, an economy that is initially in equilibrium at its potential can: A) suffer unemployment if aggregate demand falls. B) suffer immediate reductions in wages if aggregate demand falls. C) survive an OPEC price shock with no adverse effect if only policy is not adjusted. D) suffer ...continues

Quantity Theory of Money

92. The strict version of the quantity theory of money: A) implies that a doubling of M doubles real GDP. B) implies that a doubling of M doubles interest rates. C) implies that the ratio of P to M is constant. D) implies that the ratio of real GDP to money GDP is constant. E) implies none of the above.

Quantity Theory of Money

95. A sophisticated supporter of the quantity theory of money might argue: A) when the quantity of money goes up, the velocity of circulation must go down. B) when the quantity of money goes up, prices will fall proportionately. C) when the quantity of money goes up, GDP will rise in money terms. D) with full emplo ...continues