As Europe explored monetary union, evidence to date suggests that increased variability in exchange rates
A) reduces foreign trade and investment.
B) increases foreign trade and investment.
C) does not seem to have an impact on foreign trade and investment.
D) hurts foreign investment but not trade.
C
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Economic theory
A. is a deliberate simplification of factual relationships. B. seeks to disprove a hypothesis. C. is based mainly on assumptions. D. seeks to prove political ideals.
Suppose a price searcher faces the following demand curve: At $100, $90, $80, $70, and $60, the quantity demanded is 1, 2, 3, 4, and 5 units respectively. Which statement below is true?
A) Total revenue is $100. B) Total revenue is $190 when 2 units are sold. C) Total revenue is $400 when 5 units are sold. D) Marginal revenue is $80 when the price is $90.
When output is below potential and the policy rate has hit the floor of zero, the resulting fall in inflation leads to ________ real interest rates, which ________ output further, which causes inflation to fall further
A) lower; increase B) higher; depress C) higher; increase D) lower; depress
Is it possible for a currency to appreciate relative to one currency, and depreciate relative to another?
a. No, a currency rises or falls against all currencies. b. No, this could happen only under the gold standard. c. Yes, but only if all governments agree on the new rates. d. Yes, this is possible in a world of floating rates.