Currency debasement occurs when
A. the government requires that a certain form of money must be accepted in settlement of debts.
B. the value of money falls as a result of a rapid increase in its supply.
C. items are used as money that also have intrinsic value in some other use.
D. items are designated as money that are intrinsically worthless.
Answer: B
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Refer to Figure 2-8. What is the opportunity cost of one dozen orchids?
A) 0.4 dozen roses B) 2.5 dozen roses C) 7.25 dozen roses D) 16 dozen roses
A point inside a society's production possibilities curve represents
A) an unattainable combination of outputs. B) an output combination that satisfies the needs of the population. C) an underutilization of productive resources. D) a technically superior output combination.
Suppose a basket of internationally traded goods that sells for $10,000 in the United States sells for €8,000 in the euro zone. According to purchasing power parity theory, the equilibrium exchange rate should be
a. $2.50 per euro b. $1.50 per euro c. $1.25 per euro d. $1.00 per euro e. $.50 per euro
In long-run equilibrium, every perfectly competitive firm
a. maximizes its output b. chooses its plant size and output level to operate at minimum long-run marginal cost c. chooses its plant size and output level to operate at minimum long-run average total cost d. earns an economic profit e. suffers an economic loss