Under a system of flexible exchange rates, an increase in demand for a nation's currency in the foreign exchange market will
a. cause the nation's currency to appreciate.
b. make it more expensive for the nation to import goods.
c. cause the nation's balance on current account to shift toward a surplus.
d. make it less expensive for foreigners to buy the nation's goods.
A
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Explain the permanent-income hypothesis and the life-cycle hypothesis. How are these hypotheses similar?
What will be an ideal response?
No society can provide its citizens with everything that they want because of
a. greedy politicians b. lazy workers c. an educational system that does not provide hands on experience d. firms that strive to maximize profits e. a scarcity of resources
Holding all other factors constant and using the midpoint method, if a tractor manufacturer increases production from 80 to 100 units when price increases by 15 percent, then supply is
a. inelastic, since the price elasticity of supply is equal to 0.68. b. inelastic, since the price elasticity of supply is equal to 1.48. c. elastic, since the price elasticity of supply is equal to 0.68. d. elastic, since the price elasticity of supply is equal to 1.48.
When the price level falls
a. households want to lend more, so the interest rate rises making the quantity of goods and services demanded rise. b. households want to lend more, so the interest rate falls, making the quantity of goods and services demanded rise. c. households want to lend more, so the interest rate rises, making the quantity of goods and services demanded fall. d. None of the above are correct.