The physical production possibilities frontier illustrates the different combinations of goods that society can produce given
A) the constraints of finite resources and the current state of technology.
B) a constant price level.
C) its institutional constraints.
D) the natural rate of unemployment.
E) the constraints of finite resources and the current state of technology and institutional constraints.
A
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When the ratio of domestic prices to foreign prices falls:
A) the real exchange rate depreciates only when the nominal exchange rate depreciates. B) the real exchange rate depreciates even when the nominal exchange rate is constant. C) the real exchange rate appreciates. D) the real exchange rate depreciates only when the nominal exchange rate appreciates.
The ________ the expected profit from holding a foreign currency, the greater is the ________ in the foreign exchange market
A) larger; quantity demanded of dollars B) smaller; quantity demanded of foreign currency C) larger; quantity supplied of dollars D) None of the above is correct because the expected profit has nothing to do with the supply and demand for dollars or foreign currency.
People hold money as opposed to financial assets because money
A) earns interest. B) earns no interest. C) is perfectly liquid. D) earns a higher return than other financial assets.
Why might the money price for something be higher than the opportunity cost? Why might it be lower? Give an example of each to illustrate your answer