When policy makers decide to devalue the currency, such an action generally represents
A) a decision to let the currency float.
B) an increase in the pegged value of the domestic currency.
C) a reduction in the foreign price level.
D) a reduction in the domestic price level.
E) none of the above
D
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In economics, international trade is based on the existence of
A) absolute advantage between countries. B) relative advantage between countries. C) comparative advantage between countries. D) output advantage between countries.
Which of the following is most important if a country is going to achieve and sustain rapid economic growth?
a. large government expenditures as a share of GDP b. institutions and policies that are supportive of competition (open markets) and freedom of exchange. c. free elections and political democracy d. monetary policy makers who are willing to expand the supply of money rapidly
A change in the supply of one factor of production
a. will not change either the marginal productivities or the prices of other factors. b. will not change the prices of other factors, but it may change their marginal productivities. c. will not change the marginal productivities of other factors, but it may change their prices. d. changes the marginal productivities and the prices of other factors.
Nicole's income is $1,000 per month. She spends all of it on shoes (S) and books (B). Shoes cost $50 and books cost $25. Her marginal rate of substitution for shoes with books is MRSSB = 2B/3S. Illustrate her utility-maximizing combination of shoes and books and draw her price-consumption curve if the price of books rises to $30.
What will be an ideal response?