Under fixed exchange rate, the response of an economy to a temporary fall in foreign demand for its exports is
A) the currency appreciates, and output falls.
B) the currency depreciates, and output falls.
C) the currency remains the same, and output decreases.
D) the currency depreciates, and output remains constant.
E) the currency appreciates, and output remains the same.
C
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In Solow's exogenous growth model, the economy reaches a stable steady state because
A) the marginal return of capital is decreasing. B) capital is growing at a constant rate. C) the substitution effect is stronger than the income effect. D) conditional convergence holds.
Some college students think that because a college degree greatly increases their earning potential there is no opportunity cost of attending college. How would an economist look at the matter?
a. There is no opportunity cost, assuming that future earnings actually increase as expected. b. The opportunity cost is much less than it would appear, assuming that earnings increase. c. Opportunity cost is a meaningless concept in this situation. d. The college students are completely correct in all respects. e. There is still an opportunity cost, even if it is justified by higher future earnings.
Intermediate goods are goods and services used:
A. by the ultimate user. B. by state and local governments. C. as inputs. D. both as inputs and final goods.
At which of the following price levels would a shortage occur in Figure 8.4?
A. P1. B. P2. C. P3. D. P4.