With time, which one of the following strategies would most likely result in an outward shift in the production possibilities curve of an economy?
a. passage of legislation reducing the workweek to 30 hours.
b. instituting a tax policy encouraging consumption at the expense of investment.
c. instituting a tax policy encouraging investment at the expense of consumption.
d. an increase in the marginal income tax rate, which would reduce the work effort of individuals.
c
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Calculate the relative price of a basket of goods sold in the United States and Japan in terms of dollars if the yen/$ exchange rate = 90. The basket costs $100 in the United States and ¥9,000 in Japan. The relative price is:
a. 0.9, which means the U.S. basket costs more. b. 1.1010, which means the Japanese basket costs more. c. 0.9, which means the Japanese basket costs more. d. 1.0, which means they both cost the same.
Which of the following is true? a. The quantity of money demanded varies inversely with the nominal rate of interest
b. Money market equilibrium occurs at that nominal interest rate where the quantity of money demanded equals the quantity of money supplied. c. Rising national income will shift the demand for money to the right, leading to a new higher equilibrium nominal interest rate. d. All of the above are true.