Advertising is very important to firm operating in:
a. perfect competition but not in monopolistic competition
b. monopolistic competition but not in perfect competition.
c. perfect competition and monopolistic competition but not in monopoly.
d. none of the above
b
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Under a fixed exchange rate system, if an appreciation in the value of a country's currency develops, the monetary authorities must intervene by ________
A) selling foreign exchange B) buying and selling the domestic currency C) raising the foreign interest rate D) buying foreign exchange
Regarding government manipulation of the interest rate, all of these statements are correct, except
A. to address business fluctuations, governments may reduce interest rates to induce people to borrow. B. such manipulations may give little thought to the effects on resource allocation between present and future. C. economists agree with the concept of using of interest rates to allocate resources among different time periods. D. generally, the price system reflects public preference between present and future resource allocation.
Which of the following statements about quotas is correct?
a. They benefit domestic consumers through lower prices. b. They benefit domestic producers through higher prices. c. They raise world output. d. They cause outward shifts in the domestic and foreign production possibilities frontiers. e. They benefit domestic producers through increased competition that stimulates innovation.
The purchasing power parity theory predicts that the exchange rate between two currencies will adjust in the long run to reflect price-level differences between the two currency regions. A given basket of internationally traded goods should therefore sell for similar amounts around the world (net of transportation costs)
Indicate whether the statement is true or false