Currency traders expect the value of the dollar to rise. What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?
A) Demand for dollars will increase, and supply of dollars will decrease.
B) Demand for dollars will increase, and supply of dollars will increase.
C) Demand for dollars will decrease, and supply of dollars will increase.
D) Demand for dollars will decrease, and supply of dollars will decrease.
Answer: A
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Why is persistent unemployment a possibility in the Keynesian model but NOT in the classical model?
A) The Keynesian model assumes that people work for motives other than those of earning an income for themselves and supporting a family. B) The Keynesian model assumes that workers can lose their jobs to foreign competition during economic downturns. C) The Keynesian model assumes that the level of real GDP is inflexible. D) The Keynesian model assumes that nominal wages are inflexible downward.
Using the table above, what is the elasticity of demand between the prices of $9 and $7?
A) 1/4 B) 1 C) 2 D) 4 E) 6
The portion of the short-run aggregate supply that reflects the economy's resources are not fully employed is the:
A) vertical portion. B) horizontal portion. C) upward sloping portion. D) none of the above.
If the theory behind an economic model fits the data poorly, you would probably want to
A. restate the research question. B. use the theory to predict what would happen if the economic setting or economic policies change. C. start from scratch with a new model. D. enrich the model with additional assumptions.