Which of the following statements is true?
A. An increase in exports causes a balance of payments surplus.
B. A decrease in exports causes a balance of payments deficit.
C. A decreases in imports causes a balance of payments surplus.
D. none of the above
Answer: D
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An increase in the interest rate in the United States compared to the interest rate in Great Britain will
A) increase the U.S. interest rate differential. B) increase the demand for pounds. C) shift the demand curve for dollars rightward. D) Both answers A and C are correct.
When the price of raisins falls, the quantity of raisins demanded rises. Explain this change in terms of income and substitution effects
What will be an ideal response?
A model that is an oversimplification for one purpose will likely be an oversimplification for other purposes as well.
Answer the following statement true (T) or false (F)
A weaker U.S. dollar in world exchange markets means that
A. Foreigners buy the dollars that they have. B. A dollar buys more units of foreign currency than it could before. C. A dollar buys less units of foreign currency than it could before. D. A dolar buys the same amount of foreign currency than it could before, with gold backing up the value of the dollar.