The term structure relationships regarding different interest rates approximately reflect expected exchange rate changes
Indicate whether the statement is true or false
TRUE
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If the government eliminates a tax on a good with a perfectly elastic supply, who benefits most?
A) buyers B) sellers C) buyers if the demand is also perfectly elastic, otherwise sellers D) buyers if the demand is unit elastic, otherwise sellers E) Buyers and sellers benefit equally.
Calculate the price elasticity of supply for the following goods. Also comment on the elasticity in each case
a) When the price of a good is $100, 200 units are supplied. But when the price increases to $300, 220 units are supplied. b) When the price of a good is $50, 50 units are supplied. But when the price decreases to $30, 10 units are supplied.
If demand is perfectly inelastic
A) then a 1% increase in price leads to a fall in quantity of greater than 1%. B) then a 1% increase in price leads to a fall in quantity of less than 1%. C) then a 1% increase in prices then quantity demanded falls to zero. D) then a 1% increase in price has no effect on quantity demanded.
For a short-run production function in which output is determined by the number of workers utilized (capital stock held constant), which of the following is FALSE?
A. To determine the marginal product of labor, the capital stock must be held constant. B. When the marginal product of labor is negative, total product is falling. C. When diminishing returns set in, adding one more worker decreases output. D. In general, when there are few workers the marginal product of labor will be increasing. E. none of the above