Suppose one U.S. dollar can purchase a half pound of strawberries in the United States. After converting dollar to pesos, one U.S. dollar can now purchase a full pound of strawberries in Mexico. These values represent:
a) a real exchange rate.
b) a nominal exchange rate.
c) a purchasing power parity rate.
d) a transaction rate.
Ans: a) a real exchange rate.
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Examples from the United States suggest that the cost to consumers per job saved in highly protected industries is low
Indicate whether the statement is true or false
In the short-run macro model, what is the relationship between income and investment spending?
a. It is positive and stable. b. It is positive but unstable. c. It is negative and stable. d. It is negative but unstable. e. There is no relationship between the two variables.
Suppose the only two goods that Lorenzo consumes are wine and cheese. When wine sells for $10 a bottle and cheese sell for $10 a pound, he buys 6 bottles of wine and 4 pounds of cheese — spending his entire income of $100 . One day the price of wine falls to $5 a bottle, and the price of cheese increases to $20 a pound, while his income does not change. If you illustrate wine on the vertical
axis and cheese on the horizontal axis, then a. the slope of Lorenzo's budget has not changed. b. the slope of Lorenzo's budget constraint is flatter at the new prices. c. the slope of Lorenzo's budget constraint is steeper at the new prices. d. Lorenzo's budget constraint has shifted in a parallel fashion to the budget constraint with the old prices.
Which scenario below most accurately describes the process by which a technological change can affect employment patterns across industries?
A) A technological advance makes it possible to produce more of good X with less labor. As a result, labor is released from producing good X. Some of this labor ends up producing goods Y and Z. B) A technological advance makes it possible to produce less of good X with less labor. As a result, labor is released from producing good X. Some of this labor ends up producing good Y. C) A technological advance makes it possible to produce more of good X with more labor. As a result, more labor is needed to produce good X. There is less labor available to produce goods Y and Z. D) A technological advance makes it possible to produce more of good X with less labor. As a result, labor becomes more important to the production of good X. More labor ends up producing good X. E) none of the above