Figure 8.2 shows demand and costs for a monopolistically competitive firm. In the long run we expect:
A. the firm to produce more output at a higher price.
B. the firm to charge a price which is equal to its average cost of production.
C. the firm to experience a decrease in the average cost of production.
D. the firm to earn a greater profit.
Answer: B
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Under a fixed exchange rate regime, if a country has an undervalued exchange rate, then its central bank's attempt to keep its currency from ________ will result in a ________ of international reserves
A) depreciating; gain B) depreciating; loss C) appreciating; gain D) appreciating; loss
Wages for high-skilled labor have risen more than wages for low-skilled labor even though more people are highly skilled college graduates than ever before. Which of the following explains this?
a. The demand for high-skilled labor has risen alongside the number of college graduates. b. The demand for low-skilled labor has risen while the demand for high-skilled labor remains the same. c. The value of both high-skilled labor and low-skilled labor has risen, but demand for both remains the same. d. The value of low-skilled labor has risen alongside the number of high school graduates.
Suppose the government of New Country fixes the exchange rate of its currency, the Newo, in terms of the U.S. dollar. Initially the exchange rate is set at $0.50 per Newo. Later the government changes the exchange rate to $0.75 per Newo. This is an example of a(n):
A. depreciation. B. revaluation. C. appreciation. D. devaluation.
As the housing bubble collapsed, the combination of increasing interest rates and pessimism about future economic prospects:
A. increased both consumption and investment spending. B. decreased both consumption and investment spending. C. increased consumption and decreased investment spending. D. decreased consumption and increased investment spending.