Explain the elasticities and absorption approaches to the BOT. What is the most notable shortcoming of these approaches?
What will be an ideal response?
The elasticities approach analyzes the effect of devaluation on the trade balance based on elasticities of supply and demand for foreign exchange and international trade. The absorption approach views the trade balance as the difference between what the economy produces and what it takes for domestic use or absorbs. Neither approach considers capital flows.
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If all of a monopolist's costs are fixed costs, it will produce where demand is unit elastic
a. True b. False
Credit cards
A. defer payments. B. are a store of value. . C. have led to a wider use of currency. D. All of these responses are correct.
Assets are:
A. saving minus investment. B. current income minus spending on current needs. C. anything of value one owns. D. stocks, bonds, and credit card balances.
If the price elasticity of demand (Ep) equals one in the short run, then, other things being equal, in the long run Ep will be
A. less than one. B. one. C. greater than one. D. indeterminate without more information.