Refer to the graphs shown, which show indifference curve analysis with the associated demand curves.
The effect of a decrease in the price of X is shown by the movements from:
A. B to C, D to F, or E to G.
B. A to B, D to F, or E to G.
C. B to C, D to E, or F to G.
D. A to B, D to E, or F to G.
Answer: B
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Suppose we have an economy for which G = 300, T = 240, S = 80, I = 45, and imports = 40. Exports must be
A) 25. B) 40. C) 15. D) 65. E) -25.
Default risk is the risk associated with:
A. the illiquidity associated with small issues. B. the bond issuer not being able to make the promised payments. C. the effect on bond prices caused by changes in market rates of interest. D. changes in the expected inflation rate.
Concerning the covering of exchange rate risks, assuming that a depreciation of the domestic currency is feared, one can say that there is an incentive for
A. monetary authorities to rush to cover their future needs. B. importers to rush to cover their future needs. C. both exporters and importers to rush to cover their future needs. D. exporters to rush to cover their future needs.
Suppose the real interest rate rises and the quantity of loanable funds decreases. These changes could have been the result of
A) firms expecting higher future profits. B) an increase in disposable income. C) an increase in household wealth. D) a decrease in the default risk.