The purchasing power of the dollar would fall by 20% if the price index rises by:
A. 10 percent
B. 12.5 percent
C. 25 percent
D. 44 percent
C. 25 percent
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When consumers decide that they do not want virtual pets anymore, and this drives all the virtual pet producers out of business, this is a reflection of
a. an outrage b. not related to issues of freedom c. consumer sovereignty d. an inefficient use of resources e. a circular flow model
Refer to the figure below. Player A can infer that Player B will:
A. choose Left. B. choose Left when A chooses Up and choose Right when A chooses Down. C. choose Right. D. Player A cannot infer anything about what Player B will do given this matrix.
Economic profit might result from:
A. easy entry into industries. B. dynamic change and uncertainty. C. X-inefficiency. D. a decline in entrepreneurship.
Assume that policy makers are pursuing a fixed exchange rate regime and that the economy is initially operating at the natural level of output. Which of the following will occur as a result of a revaluation?
A) The real exchange rate will be permanently higher in the medium run. B) The real exchange rate will be permanently lower in the medium run. C) The effects of this revaluation on the real exchange rate will be ambiguous in the medium run. D) The real exchange rate will be unchanged in medium run. E) The nominal exchange will initially fall in the short run and then increase in the medium run.