There is resistance to exchange rate fluctuations because changes in the value of a currency are likely to cause all of the following except
A. Uncertainty for people who invest in world markets.
B. A change in the price of imports.
C. A change in the price of exports.
D. The return to a worldwide gold standard.
Answer: D
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If the graph shown represents Hanna's budget constraint, and the price of hairbands were to decrease, the slope of Hanna's budget constraint would become:
A. steeper, reflecting the fact that hairbands are now relatively less expensive.
B. flatter, reflecting the fact that hairbands are now relatively more expensive.
C. steeper, reflecting the fact that earrings are now relatively less expensive.
D. flatter, reflecting the fact that earrings are now relatively more expensive.
Identify the international organization that makes loans to developing countries
a. The World Bank b. The Federal Reserve c. The World Trade Organization d. The Industrial Development Board e. The Bank of England
If firms were required to pay the full social costs of the production of goods, including both private and external costs, other things being equal, there would probably be: a. an increase in production
b. a decrease in production. c. a greater misallocation of resources. d. a decrease in the market price of the product.
If sellers respond to very small changes in price by adjusting their quantity supplied by extremely large amounts, the price elasticity of supply approaches
a. zero, and the supply curve is horizontal. b. zero, and the supply curve is vertical. c. infinity, and the supply curve is horizontal. d. infinity, and the supply curve is vertical.