If P = domestic prices, P* = foreign prices, and e is the nominal exchange rate, which of the following is implied by purchasing-power parity?
a. P = e/P
b. 1 = e/P
c. e = P/P
d. None of the above is correct.
C
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The marginal product of labor is
A) total product divided by labor. B) the change in total product divided by the increase in labor. C) a measure of labor. D) output that does not meet quality specifications. E) total product minus the quantity of labor.
Suppose the Federal Reserve buys $50 million worth of securities from a commercial bank. As a result, the monetary base ________, and the quantity of money will ________ $50 million due to the ________
A) increases; increase by more than; money multiplier B) decreases; decrease by more than; money multiplier C) increases; increase by more than; expenditure multiplier D) decreases; decrease by less than; expenditure multiplier E) increases; decrease by; currency drain
The above figure depicts the Edgeworth box for two individuals, Al and Bruce. The contract curve can be found by connecting points
A) a and b. B) a and c. C) b and d. D) c and d.
Which of the following had resulted from the Smithsonian agreement of 1971?
a. Devaluation of the U.S. dollar b. Dissolution of a fixed exchange rate regime c. Appreciation of the U.S. dollar d. Establishment of an equilibrium exchange rate e. Laissez-faire in the foreign exchange market