If the risk of buying U.S. assets rises because it is discovered that lending institutions had not carefully evaluated borrowers prior to lending them funds, then
a. the real exchange rate and the interest rate will rise.
b. the real exchange rate will rise and the interest rate will fall.
c. the real exchange rate will fall and the interest rate will rise.
d. the real exchange rate and the interest rate will fall.
c
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The gains from trade rely on overall productivity (absolute advantage)
Indicate whether the statement is true or false
Which of the following statements about the circular-flow diagram is correct?
a. One must imagine that the economy operates without money in order to make sense of the diagram. b. The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms. c. The government cannot be excluded as a decision maker in a circular-flow diagram. d. All of the above are correct.
Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie. What is the opportunity cost to Dan of making a sandwich?
A. 5 smoothies B. 15 smoothies C. 3 smoothies D. 1/3 of a smoothie
A technological improvement can cause the production possibilities curve to shift outward because
A) it increases costs and contributes to lower production rates. B) maximum feasible outputs of both goods increase. C) production will fall, but jobs will be saved. D) it causes increases in unemployment.