One disadvantage of a fixed exchange rate system compared to a floating or managed float exchange rate system is
A) it more difficult for central banks to control inflation.
B) it does not allow for government intervention.
C) it can worsen inflation if domestic prices of imports rise quickly.
D) it eliminates the possibility of depreciation during a recession.
D
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In the short run, a firm that incurs losses might choose to produce rather than shut down if the amount of its revenue is less than its fixed cost
Indicate whether the statement is true or false
Suppose that the preferences a typical American has for quantities of electricity (E) and gasoline (G) is given by U(E,G) = a ln(E) + (1 - a) ln(G) where 0 < a < 1
Suppose the prices of gasoline and electricity in the units provided are both $1/unit and the consumer has an income of $100. Suppose in addition, the government has chosen to ration electricity by allowing a maximum consumption of 50 units of electricity (E ? 50). a. If a = .25, find the optimal consumption bundle of gasoline and electricity. Does the electricity rationing constraint have an influence on consumer's choice? b. If a = .75, find the optimal consumption bundle of gasoline and electricity. Does the electricity rationing constraint of the government have an influence on the consumer?
The marginal expenditure curve for labor is based on the assumption that
A) the most productive workers are hired first. B) the wage rate is independent of the quantity of labor employed. C) the market supply curve for labor is infinitely elastic. D) all workers are paid the same wage rate. E) none of the above
Which of the following contributes to the popularity of the argument that government spending expands employment?
A) The employment generated by the additional spending can be accomplished without increases in taxes or borrowing. B) The employment generated by the additional spending is highly visible, while the employment crowded out by taxing, spending, and borrowing is largely unseen. C) The employment generated by the additional spending is not easily seen, while the employment crowded out by taxing, spending, and borrowing is highly visible. D) Higher taxes will be popular if they finance spending that expands employment.