According to the permanent income hypothesis, Angie's consumption increases only when
A. she saves less when her income also falls.
B. her income increases unexpectedly.
C. her average lifetime income increases.
D. her current income increases.
Answer: C
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If the Canadian nominal exchange rate does not change, but prices rise faster abroad than in Canada, then the Canadian real exchange rate
a. does not change. b. rises. c. declines. d. None of the above is necessarily correct.
What distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm in the short run?
a. The size of the factory is fixed. b. There are no fixed costs. c. Output is not variable. d. The number of workers used to produce the firm's product is fixed.
Which of the following arguments do the following graphs best support in the context of a skill-biased technical change?
a. The efficiency wage model is correct.
b. A minimum wage increases unemployment.
c. Greater productivity leads to higher wages.
d. Unemployment insurance increases unemployment.
If the opportunity cost of corn to wheat is 3:1 in the United States and 5:1 in France, only the United States would benefit from trade if the actual terms of trade between corn and wheat were 2:1.
Answer the following statement true (T) or false (F)