Depreciation:
A. estimates the decrease in value of capital goods due to wear and tear over the year.
B. represents a firm's expenditure to add to its capital stock.
C. is the reduction in business inventories per year.
D. is the decline in the value of a firm's stock.
Answer: A
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Market equilibrium occurs where supply equals demand
Indicate whether the statement is true or false
If the Federal Reserve buys $3 billion worth of Japanese yen, $6 billion of euros, and sells $5 billion of British pounds, how does this affect the balance of payments?
A) Falls by $4 billion B) Rises by $4 billion C) Rises by $9 billion D) Falls by $5 billion
Risk-seeking behavior:
A. is irrational. B. is an aspect of an individual's preferences. C. is the same for everyone. D. All of these statements are true.
When the government is the sole depository of foreign currencies and exercises complete control over how these currencies may be used, this
a. is a violation of International Monetary Fund regulations for member countries because it denies the right of market forces to determine exchange rates b. creates equilibrium in the foreign exchange market which would otherwise not occur c. is an example of exchange controls that allow a government to maintain a fixed exchange rate d. is necessary in a floating exchange rate system to keep the market in equilibrium e. stimulates international trade because it eliminates all the uncertainty associated with floating exchange rates