Would each of the following groups be happy or unhappy if the Mexican peso appreciates against the U.S. dollar? Answer the question for each of the following: (a) The U.S. pension funds holding Mexican government bonds (b) U.S. tourists planning a trip to Mexico (c) Mexican exporting manufacturers (d) A Mexican firm trying to buy properties overseas
What will be an ideal response?
(a) Happy. The Mexican bonds are a safe haven for U.S. pension holders for now.
(b) Unhappy. It now costs more to travel to Mexico.
(c) Unhappy. The goods and services of Mexican exporters become relatively more expensive than their counterparts in the United States.
(d) Happy. The Mexican peso can buy more American dollar and thus more property than would be the case otherwise.
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If a good has perfectly inelastic demand,
a. an infinite amount could be sold without a change in price b. the same amount would be purchased regardless of price c. any price change is matched by an equal percentage change in quantity demanded d. total revenue remains unchanged if the price rises or falls
In a perfectly competitive market, why do suppliers rarely charge more than the current market price?
a. The suppliers’ union would not allow the supplier to charge a higher price. b. Buyers could easily choose another supplier. c. Buyers often don’t have enough money to purchase a higher-priced good. d. The suppliers’ employees would go on strike.
Which question is an illustration of a microeconomic question?
a. Is the quantity of wine purchased in one year dependent upon the price of wine? b. Is the purchasing power of the dollar higher or lower today than it was in 2000? c. Does government spending influence the total level of employment in the economy? d. Is capitalism superior to socialism?
According to Keynes, the primary cause of large-scale unemployment is
A. low prices. B. high exports. C. low exports. D. inadequate aggregate demand.