Flexible exchange rates occur when
A) speculators bet that a currency will soon depreciate.
B) governments and central banks spend foreign exchange to prop an exchange rate at a certain level.
C) no one knows the true value of a currency.
D) exchange rates are determined by forces of supply and demand.
D
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Refer to Mexico and Japan. What is the cost of producing cloth in Japan?
a. 1/2 bushel of food per bolt of cloth.
b. 3/4 bushel of food per bolt of cloth.
c. 4/3 bushels of food per bolt of cloth.
d. 3 bushels of food per bolt of cloth.
Refer to the above figure. Government policy that moved the economy from A to B would be accomplished by
A) a contractionary fiscal policy combined with an expansionary monetary policy. B) an expansionary fiscal policy combined with a contractionary monetary policy. C) a contractionary policy that would reduce the rate of inflation and would cause workers to remain unemployed longer than they were before. D) raising the minimum wage.
Gemma gains more satisfaction from eating at a French restaurant then she does from eating at a Chinese restaurant. This is a comparison of the ______ that the two dining experiences have for her.
a. equilibrium b. endowment c. substitution d. utility
Fiscal policy is concerned with government's manipulation of taxing, spending, and the money supply to encourage full employment at stable prices.
a. true b. false