If the spot exchange rate is undervalued, the foreign rate of return is:
a. equal to the domestic rate of return.
b. greater than the domestic rate of return.
c. less than the domestic rate of return.
d. diverging from the domestic rate of return.
Ans: b. greater than the domestic rate of return.
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Assume the United States is currently running a current account deficit. The most effective way of eliminating this current account deficit would be to temporarily ________ government purchases and ________ the domestic money supply
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
Refer to Figure 8.6, which shows a firm's short-run average cost curves for three different levels of capital. Which of the following statements about short-run and long-run marginal cost is true?
A. Long-run marginal cost equals short-run marginal cost at 50 units of output.
B. Long-run marginal cost equals short-run marginal cost at 130 units of output.
C. Long-run marginal cost equals short-run marginal cost at 160 units of output.
D. Long-run marginal cost and short-run marginal cost are never equal.
The economic definition of investment includes all of the following except
A. Residential construction. B. Spending for plants and capital equipment. C. A retirement portfolio of stocks and bonds. D. Net changes in business inventory.
Refer to the information provided in Table 36.2 below to answer the question(s) that follow. Table 36.2 PointAggregate Income (Y)Aggregate Consumption (C) A 10 14 B 20 23 C 30 25 D 40 26 E 50 34 F 60 39The data in the table was used to estimate the following consumption function: C = 12 + 0.4YRefer to Table 36.2. The error for point D is equal to
A. -2. B. -1. C. +2. D. +4.