Assume that an economic boom occurs in the United States, so that the United States has a much higher growth rate than other nations. What will happen to the exchange rate of the U.S. dollar?
What will be an ideal response?
The boom in the United States will lead to an increase in demand for goods and services, including foreign-made goods and services. (Recall the Keynesian consumption function relating income and consumption spending.) The increase in demand for foreign-made items (increase in imports) will increase the supply of dollars offered in the foreign-exchange market and tend to decrease the equilibrium price. The exchange rate will fall—0the dollar will depreciate—compared to other currencies.
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Given the data in the table below, what is the short-run profit-maximizing level of output for the perfectly competitive firm?OutputTotal RevenueTotal Cost1$4$228331264161052015
A. 2 units B. 3 units C. 4 units D. 5 units
Which statement is true?
A. Defense spending as a percent of the federal budget has steadily fallen since 1990. B. Today we spend as more on defense than the rest of the world combined. C. The largest federal government purchase is education. D. State and local government spending has been declining since the mid-1980s.
If the price of good A increases from $15 to $20 per unit and quantity demanded falls from 150 to 100 units, then by using the method of average values, we can calculate the absolute price elasticity of demand to be
A) 2.6. B) 0.75. C) 1.4. D) 2.4.
The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.