Which of the following items is NOT a deficit item in the balance of payments?
A. imports of merchandise
B. sales of domestic assets to foreigners
C. military spending abroad
D. purchases of gold from foreigners
Answer: B
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Suppose Chris is a potter who makes mugs. His total costs depend on the number of mugs he makes each day, as shown in the table below.Number ofMugs Per DayTotal CostPer Day0$101$142$193$254$325$406$49If the market for mugs is perfectly competitive, and mugs sell for $7.50 each, then at his profit-maximizing level of output, Chris will earn a ________ of ________ per day.
A. loss; $10 B. profit; $30 C. loss; $2 D. profit; $2
When the exchange rate, E, and the foreign price level, P*, is fixed, domestic inflation depends primarily on
A) amount of aggregate demand. B) home price level set by IMF. C) current account balance. D) government tax policy. E) foreign interest rates.
Refer to the diagram below of the market for corn. If the price in this market is at $4 per bushel, then there will be a:
A. Surplus and the price will tend to rise
B. Shortage and the price will tend to rise
C. Surplus and the price will tend to fall
D. Shortage and the price will tend to fall
According to the monetary approach to exchange rate determination, how would an increase in foreign real income affect the value of domestic currency? In your explanation, discuss both the quantity theory and purchasing power parity (PPP).
What will be an ideal response?