In a fixed exchange rate system,
A. The capital account surpluses must offset current account deficits.
B. A country can eliminate a surplus of its currency by eliminating its protectionist barriers to trade.
C. A balance-of-payments deficit can be corrected by expansionary fiscal and expansionary monetary policies.
D. Excess demand for a currency is eliminated by using foreign exchange reserves to increase demand.
Answer: B
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The Mass Rapid Transit (MRT) System in Hong Kong has been running significant losses. Transport Ministry officials have argued over whether to raise fares to combat the losses
One argument against a fare increase is that it will aggravate traffic congestion on the streets during peak commuter hours. Suppose that the current fare is $4 and the government is considering raising it to $6. Officials estimate that this reduces the number of rides purchased from 10,000 to 8,000 per day. a. Using the midpoint formula, what is the estimated elasticity of demand for MRT rides? b. What does this elasticity of demand suggest to you about what will happen to total revenue earned by the transit system if the fare increase happens? c. Last year, the MRT system incurred a loss of $50,000 per day. Do you think the fare increase will resolve the deficit problem as well as Ministry officials anticipate? Explain.
One way to avoid the principal-agent problem would be to have:
A. the employer constantly monitor the employee's efforts. B. the employee sign a waiver of release. C. the employer share all management choices with employees before making decisions. D. the employee constantly monitor the employer's activities.
An increase in product price will cause:
A. quantity demanded to increase. B. the supply curve to shift to the left. C. quantity supplied to decrease. D. quantity demanded to decrease.
Suppose the U.S. can produce 10 units of food and 5 units of clothing (or any linear combination) and Canada can produce 6 units of food and 3 units of clothing (or any linear combination). What type of trade will occur between these two countries? Explain
What will be an ideal response?