How will a sustained appreciation of the U.S. dollar over time likely affect U.S. net exports?
What will be an ideal response?
The appreciation of the U.S. dollar should lead to reduced net exports as foreigners will find the purchasing power of their money falling relative to goods priced in U.S. dollars. Conversely, Americans will find foreign goods less expensive in terms of the U.S. dollars they need to exchange for foreign currency to buy foreign goods. Consequently, U.S. exports will fall and U.S. imports will rise, thus increasing net exports and contributing to an increase in aggregate expenditures.
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If a price increase from $20 to $40 causes quantity demanded to decrease from 100 units to 50 units, one can conclude that demand for the product is _____
a. inelastic b. elastic c. perfectly inelastic d. perfectly elastic e. unit-elastic
The income elasticity of demand _____
a. must be negative because of the law of diminishing marginal utility b. could be positive, negative or zero, depending on the nature of the good c. must be positive for all goods because consumers tend to buy more at higher incomes d. is usually zero because "you can only have so much" e. can never be zero
Which of the following does not cause competitive market failure?
A. Detrimental externalities B. Beneficial externalities C. Poorly defined property rights D. The cost disease
At the monopolist's optimal amount of advertising,
A) the marginal benefit of advertising exceeds the marginal cost of advertising. B) the marginal benefit of advertising is equal to the marginal cost of advertising. C) the marginal benefit of advertising is two times smaller than the marginal cost of advertising. D) the marginal benefit of advertising is at least five times smaller than the marginal cost of advertising.