In a system of flexible exchange rates, lower inflation abroad would induce
a. a rise in the U.S. exchange rate.
b. a fall in the U.S. rate of exchange.
c. a balance of payments deficit for the United States.
d. no change in U.S. exchange rates.
B
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In considering the costs involved for student loans that must be repaid in ten years, this Application is addressing the economic concept of
A) the principle of diminishing returns. B) the real-nominal principle. C) the marginal principle. D) the principle of voluntary exchange.
If the Fed were to announce that fighting inflation is not a high priority for the immediate future ________
A) households might expect higher inflation B) the short run aggregate supply would shift upwards C) firms might begin raising their prices to keep up with expected inflation D) all of the above E) none of the above
The actual rate of inflation is equal to the expected rate of inflation along the:
a. downward-sloping Phillips curve. b. upward-sloping aggregate supply curve. c. horizontal aggregate supply curve. d. downward-sloping aggregate demand curve. e. vertical Phillips curve.
What is likely to happen to the labor market equilibrium for firemen as building codes change to require firewalls and sprinklers to be included in all new construction?
A. The number of firemen employed will increase while firemen wages will increase. B. The number of firemen employed will decrease while firemen wages will increase. C. The number of firemen employed will increase while firemen wages will decrease. D. The number of firemen employed will remain the same while firemen wages will increase. E. The number of firemen employed will decrease while firemen wages will decrease.