The growth of international banking has:
A. increased the monopoly power of most banks.
B. enhanced economic growth in many countries.
C. decreased the competition that domestic banks face.
D. decreased the efficiency of most banks.
Answer: B
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If a firm must pay for goods it has ordered with foreign currency, it can hedge its foreign exchange-rate risk by ________ foreign exchange futures ________
A) selling; short B) buying; long C) buying; short D) selling; long
Suppose a plant manager ignores some implicit marginal costs of production so that the perceived MC curve is below the actual MC curve. What is the likely outcome from this error?
A) Firm produces less than optimal quantity and earns lower profits B) Firm produces less than optimal quantity and earns higher profits C) Firm produces more than optimal quantity and earns lower profits D) Firm produces more than optimal quantity and earns higher profits
If the price of rubber (an input to the production of tires) increases:
A. the supply of tires will increase. B. the demand for tires will decrease. C. the supply of tires will decrease. D. the demand for tires will increase.
From an initial long-run macroeconomic equilibrium, if the Federal Reserve anticipated that next year aggregate demand would grow significantly slower than long-run aggregate supply, then the Federal Reserve would most likely
A) increase income tax rates. B) decrease income tax rates. C) increase interest rates. D) decrease interest rates.