Suppose, for whatever reason, the trade deficit of the United States with Europe is projected to fall and that before this happens the exchange rate between the euro and the dollar is .75 euros/dollar. The resulting exchange rate would likely
A. fall to (perhaps) .6 euros/dollar.
B. rise to (perhaps) .9 euros/dollar.
C. cause the exchange rate to have to be expressed in dollars per euro (because the other way would no longer make sense).
D. remain unchanged.
Answer: B
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Assuming all else equal, a rise in the rate of interest:
A) results in a fall in the cost of borrowing. B) results in a fall in the amount of interest accumulated on a loan. C) results in a fall in the quantity of credit demanded. D) results in an increase in the number of potential debtors.
Refer to Table 2-14. What is Scotland's opportunity cost of producing one motorcycle?
A) 0.25 guitar B) 4 guitars C) 12 guitars D) 16 guitars
Suppose the installation of sound absorbing materials in the walls of an auto body shop would cost $4,000, and would generate $25,000 in increased property values for an adjacent neighbor. Completely reducing all noise would require extensive retrofitting, costing $100,000, and would generate $30,000 increase in property values for the adjacent neighbor. Thus there are net social benefits to
installing the sound-absorbing materials. Which of the following would be consistent with the Coase Theorem? a. If the area is zoned industrial and the shop has the right to emit noise, the efficient solution would be realized if the two parties negotiated and the neighbor bought sound-absorbing materials for the shop. b. If the area is zoned industrial and the shop has the right to emit noise, the efficient solution would be realized when the neighbor appealed to the EPA for regulations requiring zero noise emissions and thus complete retrofitting of the shop. c. If the area is zoned residential, and the neighbor has the right to a relatively quiet environment, the efficient solution would be realized by requiring the shop owner and the building owner to share the cost of reducing noise emissions to zero. d. If the area is zoned residential, and the neighbor has the right to a relatively quiet environment, the efficient solution would be realized by requiring the neighbor to completely retrofit the building to reduce noise emissions to zero.
In this graph, output level RGDP2 is ______.
a. sustainable at equilibrium point E1
b. sustainable at equilibrium point e2
c. sustainable at equilibrium point E3
d. not sustainable at equilibrium points E1, e2, or E3