If the dollar-pound exchange rate is $1.00 per pound, then a shirt priced at 25 pounds will cost an American
a. $25
b. $50
c. $26
d. $27
e. an amount that cannot be calculated without additional information.
A
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Game theory assumes that to compute the likely outcome of games, one needs to assume that players act
a. Rationally b. Optimally c. In their own self-interest d. All the above
One way to overcome the problem of adverse selection in labor markets is to
a. use signaling and screening b. advertise job openings widely c. contract out the hiring function d. pay above average wages e. pay below average wages
Suppose that real GDP grew more in Country A than in Country B last year
a. Country A must have a higher standard of living than country B. b. Country A's productivity must have grown faster than country B's. c. Both of the above are correct. d. None of the above are correct.
Keynes thought that the behavior of the economy in the short run was influenced by what he called "animal spirits." By this he meant that business people sometimes felt good about the economy, and carried out lots of investment, and at other times felt
bad about the economy, and so cut back on their investment spending. Explain how such fluctuations in investment would lead to fluctuations in real GDP and prices.