Suppose a central bank tries to keep exchange rates fixed. When there is an increase in the demand for foreign goods, the central bank will most likely
A. use foreign reserves to buy the domestic currency.
B. sell the domestic currency in exchange for foreign reserves.
C. do nothing.
D. buy foreign currency in exchange for the domestic currency.
Answer: A
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The infant industry argument is valid when
A. a new industry is suffering financial losses. B. a new industry is less efficient than foreign competitors. C. the industry’s prospective gains are sufficient to repay the social losses incurred while it is being protected. D. the industry is not likely to be profitable in the future.
If skilled labor is ___ unskilled labor, then an influx of unskilled immigrants could ____ the demand for skilled labor
a. a substitute for; raise b. a complement to; raise c. a complement to; lower d. a complement to; substitute.
Economies of scale exist when
a. long-run average costs decline as output increases. b. long-run average costs are constant. c. long-run average costs increase as output increases. d. short-run average costs decline. e. short-run average costs increase.
Given the following hypothetical data where C = $3,000; I = $1,200; G = $2,000; X ? M = ?$500; depreciation = $200; transfer payments = $800, net domestic product is _____
a. $5,500 b. $5,700 c. $6,200 d. $6,400 e. $6,900