Which of the following statements is TRUE about a vehicle currency?
A) It is widely used to denominate contracts made by parties who reside in the country that issues the vehicle currency.
B) The dollar is sometimes called a vehicle currency because of its pivotal role in many foreign exchange deals.
C) There is much skepticism that the euro will ever evolve into a vehicle currency on par with the dollar.
D) The pound sterling, once second only to the dollar as a key international currency, is beginning to rise in importance.
E) Vehicle currencies include nondeliverable currencies like the renminbi.
B
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The positive relationship between short-run aggregate supply and the price level indicates that, in the short run
A) firms produce more output as the price level falls. B) firms produce more output as the price level rises. C) the money wage rate increases when moving along the short-run aggregate supply curve. D) lower price levels are more profitable for firms.
Inflation: a. always reduces real income
b. never reduces real income. c. reduces the real income of workers when wages increase more than prices do. d. reduces the real income of workers when wages increase less than prices do. e. increases the real income of workers only when wages increase less than prices do.
Adjustable rate mortgages became increasingly attractive and grew as a percentage of total outstanding mortgages during 2002 to 2004 because
a. interest rates were kept artificially low during this period. b. interest rates rose sharply during this period. c. lending standards were tightened during this period. d. housing prices declined during this period.
Which of the following is not an example of a barrier to entry?
a. John owns the only parcel of lakeside property with a beach that is safe for swimming. He charges admission to neighbors who want to use the beach. b. Jackie owns the copyright to a popular song. She receives royalties every time a radio station plays her song. c. John Jr. owns the best seafood restaurant in a popular resort area. He charges high prices because the quality of the food is so good. d. Caroline owns the patent for a new running shoe. She receives payments from the company who manufactures the shoes.