If the nominal exchange rate e is foreign currency per dollar, the domestic price is P, and the foreign price is P*, then the real exchange rate is defined as

You have two options for how to spend the afternoon. You can either go see a movie with your roommate or work as a tutor for the Math Department. From experience, you know that going to see a movie gives you $20 worth of enjoyment, and with your student discount, a movie ticket only costs $12. If you spend the afternoon working as a math tutor, you will get paid $45. On a typical day, you wouldn't be willing to spend the afternoon working as a math tutor for less than $35. What is your opportunity cost of seeing a movie this afternoon?

A. $22 B. $8 C. $57 D. $12

How do the new Keynesian and real business cycle models differ on the ability of inflationary expectations to affect output?

What will be an ideal response?

Assume in a competitive market that price is initially below the equilibrium level. We can predict that price will:

A. decrease, quantity demanded will decrease, and quantity supplied will increase. B. decrease and quantity demanded and quantity supplied will both decrease. C. increase, quantity demanded will increase, and quantity supplied will decrease. D. increase, quantity demanded will decrease, and quantity supplied will increase.

In the long run, the number of firms in an industry may change. If the number of firms increases, then

A) the supply curve will shift outward to the right. B) the demand curve will shift outward to the right. C) the supply curve will shift inward to the left. D) the demand curve will shift inward to the left.