Under a floating exchange-rate regime, the domestic currency will normally depreciate if the money supply
A. contracts.
B. is managed to keep the country's inflation rate steady.
C. expands.
D. does not change with the change in the exchange rates.
Answer: C
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The tables above show the marginal costs and benefits from production of paper. If the market is perfectly competitive and unregulated, the efficient level of output
A) is achieved. B) can be achieved by giving paper producers a subsidy. C) can be achieved by imposing a Pigovian tax on paper producers. D) cannot be achieved.
A firm has $200,000 to spend on either direct sales or advertising. Suppose further that if the $200,000 is spent on direct sales, it will bring in an accounting profit of $40,000. Instead, the (accounting) profit it could obtain from a $200,000 investment in advertising is $X. Compare the profitability of the two options if (a) X = 50,000, (b) X = 30,000, or (c) X = 40,000.
What will be an ideal response?
In the above figure, assume d3 is the demand curve faced by this firm. Which is TRUE?
A) This firm is earning an economic profit. B) This firm is experiencing an economic loss. C) This firm is breaking even. D) This firm's total revenues equal HRD0.
The long-run price elasticity of demand for a good is
a. zero b. smaller (in absolute value) than the short-run price elasticity c. larger (in absolute value) than the short-run price elasticity d. infinite e. the same as the short-run elasticity