What happens in the foreign exchange market if the U.S. interest rate increases? What is the effect on the exchange rate?
What will be an ideal response?
In the foreign exchange market, the increase in the U.S. interest rate increases the demand for dollars and the demand curve for dollars shifts rightward. The increase in the interest rate also decreases the supply of dollars and the supply curve of dollars shifts leftward. As a result, the exchange rate rises so that the dollar appreciates.
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If the price of a hamburgers increases, the substitution effect works to
a. decrease the quantity of hamburgers supplied b. increase the number of hamburger buns demanded c. decrease the quantity of hamburgers demanded d. increase the number of hamburger buns supplied e. increase the quantity of hamburgers demanded
The PPF shifts if
A) the unemployment rate falls. B) people decide they want more of one good and less of another. C) the prices of the goods and services produced rise. D) the resources available to the nation change.
________ typically lead to increases in ________
A) decreases in interest rates; investment B) increases in disposable income; consumption C) increases in autonomous investment; investment D) all of the above E) none of the above
An "optimally imperfect" decision is one that
a. is vaguely right instead of precisely wrong. b. recognizes that the decision could always be better if given more time. c. recognizes that the cost of additional information probably exceeds the potential gain from making a better decision. d. recognizes that any decision is imperfect because humans have limited intellectual capacities.