If a firm is a perfectly competitive purchaser of factor inputs and the wage rate is $5, the marginal factor cost for labor is
A) greater than $5.
B) less than $5.
C) $5.
D) indeterminate.
C
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In a large open economy like the United States, an increased government budget deficit which reduces national saving
A) reduces investment and improves the current account balance. B) reduces investment and reduces the current account balance. C) has no effect on investment, but reduces the current account balance. D) has no effect on either investment or the current account balance.
Per-unit transaction costs
a. may cause the demand and supply curves to shift either inward or outward depending on the value obtained from transaction agents. b. refer only to the commission paid to a third party for each transaction made. c. are absorbed by the party seeking the transaction. d. have the same effect on behavior as do lump-sum transaction costs; the difference in terminology is purely definitional.
Everything else constant, who is least likely to lose from unexpected inflation?
a. A retired person whose pension payments are fixed in dollars b. A person with a large amount of money deposited in a savings account c. A bank scheduled to receive fixed nominal mortgage payments d. A homeowner scheduled to make fixed nominal mortgage payments e. A consumer who spends extra time shopping for the lowest prices
Which of the following exchange rate systems is advisable for a country that would like to have greater exchange rate stability but also would like to have the its exchange rate change gradually over time as its prices relative to other countries change?
a. Crawling peg b. Fixed exchange rates c. Managed float d. Fixed rates within bands