If the nominal exchange rate were to be expressed as the number of units of domestic currency per unit of foreign currency, and that rate increases, then the domestic currency has:
A. appreciated.
B. depreciated.
C. become undervalued.
D. become overvalued.
Answer: B
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Which of the following statements is TRUE about contestable markets?
A) There are significant barriers to entry. B) Firms earn large economic profits. C) Each firm faces a perfectly elastic demand. D) There are few firms in the industry.
Active policy making refers to
A) actions taken by policy makers in response to or in anticipation of some change in the overall economy. B) policy making that is carried out in response to a rule. C) relying on policies that act as automatic stabilizers. D) nondiscretionary policy making.
Juan Pablo and Zak are competitors in a local market. Each is trying to decide if it is better to advertise on TV, on radio, or not at all. If they both advertise on TV, each will earn a profit of $8,000 . If they both advertise on radio, each will earn a profit of $14,000 . If neither advertises at all, each will earn a profit of $20,000 . If one advertises on TV and other advertises on radio,
then the one advertising on TV will earn $12,000 and the other will earn $10,000 . If one advertises on TV and the other does not advertise, then the one advertising on TV will earn $22,000 and the other will earn $4,000 . If one advertises on radio and the other does not advertise, then the one advertising on radio will earn $24,000 and the other will earn $8,000 . If both follow their dominant strategy, then Juan Pablo will a. advertise on TV and earn $8,000. b. advertise on radio and earn $14,000. c. advertise on TV and earn $22,000. d. not advertise and earn $20,000.
Discretionary fiscal policy entails
A. automatic changes in spending or taxes that occur as economic conditions change. B. changing government spending or tax policy to offset automatic stabilizers. C. legislative changes in spending or tax policies. D. actions exercised by the President alone in the United States.