For this question, assume that exchange rates flexible and that the exchange rate expected to occur in one year is not constant. Suppose that individuals now expect that the domestic central bank will pursue expansionary monetary policy in one year. This expected future monetary expansion will cause which of the following to occur?
A) The current nominal exchange rate will decrease.
B) The current nominal exchange rate will increase.
C) The current nominal exchange rate will not change.
D) The effects on the current nominal exchange rate are ambiguous.
A
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Refer to Figure 2-1. Point A is
A) technically efficient. B) unattainable with current resources. C) inefficient in that not all resources are being used. D) the equilibrium output combination.
If the price is $110 per unit, what is the break even amount of units for technology B?
a. 20 b. 25 c. 30 d. None-They would have to shut down
Why might an equation that has always predicted accurately in the past prove to be wrong following a policy change?
a. Because the policy may change people's behavior and invalidate the equation. b. Because people's expectations may cease to be rational. c. Because uncertainty means that every equation contains some degree of error. d. Because the policy change may affect economic variables not contained in the equation.
Suppose that the average equilibrium monthly rental price of apartments and rooms in a college town had been steady at $600, but then the college expanded enrollment from 10,000 to 12,000, and suddenly there was a shortage of rental housing at the prevailing price of $600 . Which of the following is most likely to be true?
a. The shortage occurred because supply increased, and a new market equilibrium will feature lower rental prices and fewer rental units available on the market. b. The shortage occurred because demand increased, and a new market equilibrium will feature higher rental prices and fewer rental units available on the market. c. The shortage occurred because demand decreased, and a new market equilibrium will feature lower rental prices and fewer rental units available on the market. d. The shortage occurred because demand increased, and a new market equilibrium will feature higher rental prices and more rental units available on the market.