91) Consider the monetary transmission mechanism in an open economy. Other things being equal, a decrease in the domestic money supply leads to A) an appreciation of the domestic currency, thereby inhibiting net exports and reducing aggregate demand. B) a depreciation of the domestic currency, thereby inhibiting net exports and raising aggregate demand. C) a depreciation of the domestic currency, thereby stimulating net exports […]

    11) The best economic case one can make for an active industrial policy involves A) the national security argument. B) the technological spillover argument. C) the environment preservation argument. D) the high value added argument. E) raising the national income.     12) Spencer and Brander’s model highlights the existence of A) aircraft industries. B) excess returns present in highly competitive markets. C) […]

    41) If we compare the last 30 years of inflation as recorded by the CPI and the PCE price index, we find that the A) two measures fluctuate together. B) CPI inflation rate has consistently been at least 5 percentage points above the PCE price index inflation rate. C) PCE price index inflation rate has consistently been at least 5 percentage points above […]

    11) The labor market in Major League Baseball features A) a monopoly by the League in employing professional baseball players that is offset by the players’ membership in a labor union. B) a monopsony by the League in employing professional baseball players that is offset by the players’ membership in a labor union. C) an oligopoly by the League in employing professional baseball […]

    61.When a producer has a comparative advantage at producing a good, it means the producer: A. can produce more of that good than others with the same number of workers. B. has the ability to produce a good or service at a lower opportunity cost than others. C. has no reason to trade with others. D. is efficient. 62.When a producer has an absolute advantage at producing […]

  81) A successful market economy requires well defined property rights and A) balanced supplies of all factors of production. B) an independent court system to adjudicate disputes based on the law. C) detailed government regulations. D) a safety net to ensure that those who cannot participate in the market economy can earn an income. 82) All of the following are considered intellectual property except […]

  51) The above figure illustrates the market for corn. If point “a” represents the original equilibrium and point “b” the new equilibrium, which of the following could have caused the change? A) a decrease in the number of corn growers B) a decrease the price of wheat, a substitute in production for corn C) an increase in the cost of the seed used to […]

  11) The theory of PPP suggests that if one country’s price level rises relative to another’s, its currency should A) depreciate in the long run. B) appreciate in the long run. C) depreciate in the short run. D) appreciate in the short run. 12) In the long run, a rise in a country’s price level (relative to the foreign price level) causes its currency […]

  18.4   New Classical Macroeconomics   1) Traditional macroeconomic models assume that people’s expectations of inflation A) are determined by looking at all the relevant information and forecasting the future inflation rate. B) will be zero in the future. C) are set by assuming a continuation of present inflation. D) are set by merely guessing what the future inflation rate will be.   2) The […]

  82) In the mid-1970s, Newsweek magazine reported that the city of Atlanta lowered its city bus fares from 40 cents to 15 cents a passenger. The number of bus riders increased by 15 percent after the fare cut. This set of results indicates that the demand for bus rides in Atlanta at that time was A) unit elastic. B) perfectly inelastic. C) elastic. D) […]