The equilibrium in a foreign exchange market determines
A. Domestic economic conditions.
B. The exchange rate.
C. The terms of trade.
D. The balance of payments.
Answer: B
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Given the reserve-holding ratio e and the fraction of deposits held as cash c, the deposit multiplier becomes
A) e - c. B) 1/(e - c). C) e/c. D) ec. E) 1/(e + c).
As output is expanded, if marginal cost (MC) is less than average total cost (ATC),
a. ATC must be at its minimum. b. ATC must be at its maximum. c. ATC must be decreasing. d. the firm must be earning economic profit.
It is true that:
A. equal increases in government spending and taxes do not change the equilibrium GDP. B. equal increases in government spending and taxes reduce the equilibrium GDP. C. equal increases in government spending and taxes increase the equilibrium GDP. D. taxes have a stronger effect upon equilibrium GDP than do government purchases.
The short-run aggregate supply curve would shift and the long-run aggregate supply curve would remain fixed if
A) there was a temporary shock that influenced the supply side. B) there was a permanent increase in aggregate demand along with a permanent decrease in aggregate supply. C) there was a permanent increase in aggregate demand. D) there was a temporary shock to aggregate demand.