Suppose, for whatever reason, the trade deficit of the United States with Europe is projected to grow and that before this happens the exchange rate between the euro and the dollar is .75 euros/dollar. The resulting exchange rate would likely
A. cause the exchange rate to have to be expressed in dollars per euro (because the other way would no longer make sense).
B. rise to (perhaps) .9 euros/dollar.
C. fall to (perhaps) .6 euros/dollar.
D. remain unchanged.
Answer: C
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In the Keynesian model, short-run equilibrium occurs
A) where the IS and LM curves intersect. B) where the IS curve, LM curve, and FE lines intersect. C) where the IS curve intersects the FE line. D) where the LM curve intersects the FE line.
Of the following groups, which benefits most from a government price support program that establishes a floor price for an agricultural product that is higher than the product's market clearing price?
A) consumers, who purchase more units of the product than they did before the price support program was implemented B) taxpayers, who no longer must provide funds to purchase surplus units of the product once the price support program is in place C) producers, who earn a higher price on the sale of each unit and also sell more units, thereby unambiguously earning higher revenues D) the government, which receives subsidy payments from producers that are required to sell more of the product at a higher price under the government's program
The phases of a business cycle in order include
A) Peak, recession, trough and expansion. B) Peak, expansion, recession and trough. C) Peak, recession, expansion and trough. D) None of the above.
Suppose all individuals are identical, and their monthly demand for Internet access from a certain leading provider can be represented as p = 5 - (1/2)q where p is price in $ per hour and q is hours per month. The firm faces a constant marginal cost of $1. Potential consumer surplus equals
A) $4. B) $8. C) $16. D) $32.