Wes works as a delivery man and can work as many hours as he likes for $12 an hour. He typically works 40 hours a week. Recently, his pay has been cut, and Wes decides to work:
A. less hours, because the income effect dominates his labor supply decision.
B. the same amount, because the price effect dominates his labor supply decision.
C. more hours, because the price effect dominates his labor supply decision.
D. more hours, because the income effect dominates his labor supply decision.
Answer: D
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A world price of a good:
A) is the lowest price for which the good is available in any country in the world. B) is the price prevailing in the country with the highest production of the good. C) is equal to the lowest opportunity cost of producing the good in any country in the world. D) is the prevailing price of the good on the global market.
Under a fixed exchange rate regime, if a country has an ________ exchange rate, then its central bank's attempt to keep its currency from depreciating will result in a ________ of international reserves
A) undervalued; gain B) undervalued; loss C) overvalued; gain D) overvalued; loss
Suppose two goods (X and Y ) are being produced efficiently and that the production of X is always more labor intensive than the production of Y. Production depends only on two factors (capital and labor); these may be smoothly substituted for each other. The total quantities of these inputs are fixed. An increase in the production of X and a decrease in the production of Y will
a. increase the capital-labor ratio in each firm. b. decrease the capital-labor ratio in each firm. c. leave the capital-labor ratio for each firm unchanged. d. increase the capital-labor ratio in Y production and decrease the capital-labor ratio in X production.
Which of the following is not an example of a liquid asset?
(A) A checking account (B) Cash (C) A certificate of deposit (D) Travelers' checks