If monetary policy makers want to target a negative interest rate, they:
A. need to stop inflation before they do it.
B. need to encourage inflation before they do it.
C. cannot do so since negative interest rates are impossible.
D. need to stop asset inflation before they do it.
Answer: B
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A large country imposes capital controls that prohibit foreign borrowing and lending by domestic residents. The country is currently running a financial account surplus. The imposition of the capital controls will cause
A) net exports to decrease. B) real domestic interest rates to rise. C) real world interest rates to rise. D) desired national saving to fall.
Diminishing marginal returns occurs as a firm adds more variable inputs to at least one fixed input because:
A. The ability or quality of the variable inputs hired decreases as more are hired B. The firm must lower the price of its product when it produces more units of output C. The per unit cost it must pay for variable inputs increases as more inputs are hired D. As more variable inputs are hired, the amount of the fixed input per variable input decreases