The foreign exchange rate is
A. another name for purchasing power parity.
B. part of the circular flow diagram.
C. an adjustment that takes into account differences in the true cost of living across countries.
D. the price of one currency in terms of another.
Answer: D
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During an economic downturn, Keynes argued that firms would have ________ to increase spending because ________.
A. no incentive; interest rates would be too high. B. no incentive; they already had enough capacity to meet demand. C. a strong incentive; interest rates would be too high. D. a strong incentive; they wouldn't have enough capacity to meet demand.
The short run is a period of time in which
A) the quantity of at least one factor of production is fixed. B) the amount of output is fixed. C) prices and wages are fixed. D) nothing the firm does can be altered.
A perfectly competitive wheat farmer in a constant-cost industry produces 3,000 bushels of wheat at a total cost of $36,000. The prevailing market price is $15. What will happen to the market price of wheat in the long run?
A) The price falls to $12. B) The price rises above $15. C) The price remains constant at $15. D) There is insufficient information to answer the question.
Liquidity can be defined as the
A. cash value of money. B. value of money adjusted for inflation. C. value of fiat money when used for spending. D. ease with which an asset can be converted to a spendable asset.