Explain the forces that can cause an exchange rate to change.
What will be an ideal response?
Anything that can cause the demand or supply of a currency to change will affect the exchange rate. In addition, governments can intervene in the exchange market to cause a depreciation or appreciation of their currencies. If a currency is allowed to float with supply and demand, a decrease in interest rates, for example, can cause global investors to reduce their purchases of that country's bonds and cause the demand for that currency to fall, causing it to depreciate.
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In the Keynesian model with government and the foreign sector added, what are the components of spending? Which of these components are autonomous and which are not? How is the equilibrium found?
When the economy is not at an equilibrium, what adjustments are made?
"Gross Investment spending" refers exclusively to purchases of plant and equipment by businesses and net changes in business inventories
Indicate whether the statement is true or false
Comment: “We could do a better job of solving the economizing problem by setting our consumption goals lower rather than by setting our production goals higher.”
Please provide the best answer for the statement.
You currently sell the same product to both professional plumbers and homeowners, and are able to prevent transfer from one group to the other. Your current prices, quantities sold, and the absolute values of the slopes of the demand curves are as follows: 
If your marginal cost is $10 and you are interested in maximizing your revenues, how would you adjust your prices?
A. Increase plumbers' price and decrease homeowners' price. B. Decrease plumbers' price and increase homeowners' price. C. Increase prices for both groups. D. Decrease prices for both groups.