If the price of a car in the United States is $22,000, and the exchange rate between the dollar and the Japanese yen falls from 125 yen to 105 yen per dollar, then the price of the American car in Japan will
A. rise.
B. fall.
C. remain the same.
D. be irrelevant, because the Japanese government will impose restrictions on imports from the United States.
Answer: B
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Which of the following has been a problem faced by the FDIC in its provision of federal deposit insurance?
A) a relatively low number of bank failures each year, which has reduced the need for deposit insurance B) moral hazard arising from the tendency for the highest-risk banks to be those most interested in obtaining deposit insurance in the first place C) adverse selection arising from the tendency for banks to take on more risk after they receive deposit insurance D) moral hazard arising from the tendency for banks to take on more risk after they receive deposit insurance
The unemployment rate will rise when
A) people get discouraged and quit looking for a job. B) the average work week falls from 40 hours to 39 hours. C) the duration of unemployment increases. D) the size of the labor force increases without an increase in employment.
The economy is in a recessionary gap, there is incomplete crowding out, and government implements expansionary fiscal policy. It follows that
A) Real GDP will fall. B) the AD curve will shift to the right. C) the price level will fall. D) the recessionary gap will necessarily be completely eliminated. E) b and d
If the risk of buying U.S. assets rises because it is discovered that lending institutions had not carefully evaluated borrowers prior to lending them funds, then
a. the real exchange rate and the interest rate will rise. b. the real exchange rate will rise and the interest rate will fall. c. the real exchange rate will fall and the interest rate will rise. d. the real exchange rate and the interest rate will fall.