Which of the following problems will most likely occur with a system of flexible exchange rates?
A. Macroeconomic instability as exports and imports fluctuate with the exchange rates.
B. Government favoritism toward selected importers of goods and services.
C. The emergence of black markets for foreign currency.
D. Distortions in trade patterns away from the pattern suggested by comparative advantage.
A. Macroeconomic instability as exports and imports fluctuate with the exchange rates.
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Refer to the scenario above. Suppose you decide to buy a Toyota Corolla. You value the car for $10,000. You don't know it, but the car dealer values it for $8,500. Which of the following is likely to be true?
A) You will end up buying a high-quality car. B) You will end up buying a bad-quality car. C) You will end up earning a positive consumer surplus. D) You will choose not to buy the car.
Which of the following is NOT included in the M1 measure of money?
A) currency held outside banks B) currency held in bank vaults C) checking deposits at commercial banks D) checking deposits at credit unions
If the United States' production possibility frontier was flatter to the widget axis, whereas Germany's was flatter to the butter axis, we know that
A) the United States has no comparative advantage B) Germany has a comparative advantage in butter. C) the U.S. has a comparative advantage in butter. D) Germany has comparative advantages in both products. E) the U.S. has a comparative disadvantage in widgets.
A nonprice determinant of demand refers to something that:
A. affects the price other than demand. B. affects demand other than the price. C. determines how large a role prices play in the demand decision. D. determines how prices are affected by income.