The U.S. dollar is important as a vehicle for foreign-exchange transactions between two countries other than the United States.
a. true
b. false
a. true
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If an economy experiences an increase in its labor force, everything else constant, then at constant world prices, it will
A) produce more of the labor intensive good and less of the capital intensive good. B) produce more of both goods. C) produce the same amount of both goods. D) produce less of the labor intensive good and more of the capital intensive good.
The cross-price elasticity of demand is useful for determining which pairs of commodities serve as substitutes for each other
a. True b. False
Suppose that when a firm increases output by 50%, long-run total cost increases by less than 50%. The firm will experience
A. decreasing marginal rate of technical substitution. B. economies of scale C. diminishing marginal returns. D. diseconomies of scale
Use the following graph to answer the next question.
Suppose the economy is currently in equilibrium at output level Q2, but full-employment output is at level Q1. If the government fails to enact fiscal policy and no other conditions change, the eventual price level will most likely be closest to
A. P0. B. P1. C. P2. D. P3.