A person who uses a rule of thumb to determine the best rate of savings:
A. is necessarily making a mistake, since finding the best rate of savings involves complex mathematical models.
B. is necessarily making a mistake, since there is no single best rate of savings.
C. is not necessarily making a mistake because rules of thumb often arise out of trial and error or from observation of others' successful decisions.
D. is not necessarily making a mistake because, in the long run, all rates of savings turn out to yield the same economic benefit.
C. is not necessarily making a mistake because rules of thumb often arise out of trial and error or from observation of others' successful decisions.
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Assuming no change in the nominal exchange rate, how will a higher rate of inflation in the United States relative to France affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country.)
A) The real exchange rate will rise. B) The real exchange rate will be unaffected. C) The real exchange rate will fall. D) The impact on the real exchange rate cannot be predicted.
The demand curve for a monopolistically competitive firm is
A) the same as the industry demand curve. B) more elastic than the demand curve of the perfectly competitive firm. C) less elastic than the demand curve of the perfectly competitive firm. D) horizontal.
One result of asymmetric information in the market for bank loans is that
a. few loans are offered b. few bad loans are made c. more bad loans than good loans may be made d. lenders benefit at the expense of borrowers e. the interest on good loans will be higher than otherwise
If New York City expects that an increase in bus fares will raise mass transit revenues, it must think that the demand for bus travel is:
a. elastic. b. unit elastic. c. inelastic. d. perfectly inelastic. e. 10.