Imagine that the economy is at a point that is above both AA and DD, where both the output and asset markets are out of equilibrium. Which first action is TRUE?
A) The economy will stay at this level in the short run.
B) The exchange rate will first drop to a point on the AA schedule.
C) The exchange rate will first move to a point on the DD schedule.
D) The AA-DD equilibrium will shift to the position of the economy.
E) The exchange rate will first move left to a position on the AA schedule.
B
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Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel's and Mia's hourly productivity are shown in Table 3.3. Which of the following is TRUE?
A) Nigel has both an absolute and comparative advantage in bandana production. B) Nigel has both an absolute and comparative advantage in hair pin production. C) Nigel has neither an absolute nor comparative advantage in hair pin production. D) Nigel has neither an absolute nor a comparative advantage in bandana production.
In the above figure, the monopsony wage rate is ________ and the quantity of labor is ________
A) $7.00; 150 hours B) $8.00; 200 hours C) $6.00; 100 hours D) $8.00; 100 hours
Ceteris paribus, in the long run, a negative supply shock causes
A) the long-run aggregate supply curve to shift to the left. B) unemployment to fall below its short-run level. C) equilibrium real GDP to fall. D) the price level to rise initially, and then return to its lower level.
Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln. What is a reason for this difference in price?
A) Booth was a well-known actor; the demand for his letters rose as wealthy actors attempted to buy them. B) Many people are more fascinated by villains and anti-heroes than by heroic figures. C) There are more letters available for collectors to buy that were written by Lincoln than there are letters that were written by Booth. D) There is a surplus of letters written by Booth and a shortage of letters written by Lincoln.