People choose to hold a smaller quantity of money if
a. the interest rate increases, which causes the opportunity cost of holding money to increase.
b. the interest rate increases, which causes the opportunity cost of holding money to decrease.
c. the interest rate decreases, which causes the opportunity cost of holding money to increase.
d. the interest rate decreases, which causes the opportunity cost of holding money to decrease.
a
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The ________ the proportion of one's budget spent on a good, the ________ the elasticity of demand
A) greater; lower B) greater; greater C) lower; greater D) lower; more responsive
A large country imposes capital controls that prohibit foreign borrowing and lending by domestic residents. The country is currently running a financial account deficit. The imposition of the capital controls will cause
A) net exports to increase. B) real domestic interest rates to rise. C) real world interest rates to fall. D) desired national saving to fall.
In the above figure, if the price is $4 per unit, how many units will a profit maximizing perfectly competitive firm produce?
A) 0 B) 5 C) 20 D) 30
Prices of European goods are rising faster than prices of similar goods in the United States. Consequently Europeans substitute American goods for European goods and the euro depreciates. This phenomenon is the basis of
a. Ricardo's Law. b. comparative advantage. c. absolute advantage. d. purchasing power parity.