Which statement makes sense?
a. Fixing exchange rates causes currency markets to reach equilibrium quickly.
b. Having an absolute advantage in the production of goat cheese means the country will specialize in and produce all of the goat cheese traded
c. Arbitrage opportunities are quickly taken.
d. Floating exchange rates reduce uncertainty in the currency markets.
e. When the dollar depreciates, U.S. consumers can buy more imported goods.
C
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Countries that borrow large amounts of money from foreign lenders prefer to:
A) hold an undervalued currency. B) hold an overvalued currency. C) have a high rate of unemployment. D) have a low rate of inflation. Suppose India borrows $10,000 from the U.S. at the beginning of 2012. The flexible exchange rate is 50 Indian rupees per dollar.
The marginal social cost curve ________ when production involves negative externalities
A) is parallel to the horizontal axis B) is parallel to the demand curve C) lies above the supply curve D) lies to the right of the supply curve
What do most economists think is the most accurate statement about velocity?
a. It is fairly constant in the short run, but varies considerably in the long run, complicating predictions about nominal GDP. b. M1 velocity is more stable in the short run than M2 velocity, and it has been a superior tool in predicting changes in nominal GDP. c. It is not constant in the short run, and predictions about nominal GDP have not fared well. d. M2 velocity has been less stable than M1 velocity, but both are reliable enough to make accurate predictions about changes in nominal GDP.
Recall the Application about the productivity of large infrastructure investments to answer the following question(s). According to the Application, Donaldson and Hornbeck's (2010) study estimated that without railroads, agricultural productivity would have been ________ less.
A. 60 percent B. 100 percent C. 30 percent D. 37.8 percent