The smaller the reserve ratio the:
A. less money is created in the economy.
B. greater the money is created in the economy.
C. smaller is the money multiplier.
D. less a bank can loan out.
Answer: B
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If a country's central bank does not intervene in the foreign exchange market, the country has
A) a crawling peg exchange rate policy. B) a fixed exchange rate policy. C) a flexible exchange rate policy. D) no exchange rate policy.
Assume that a firm's marginal revenue curve intersects the rising portion of its marginal cost curve at 500 units of output. At this output level, a profit-maximizing firm's total cost of production is $1,000 . If the price of the product is $5 per unit, the total revenue earned by the firm will be:
a. $1,500. b. $250. c. $500. d. $2,500. e. $1,000.
Relative to a no-trade situation, if the United States exported chairs, the domestic price of chairs
a. would rise, and domestic output would also rise. b. would decline, but the domestic output would rise. c. would decline, and domestic output would decline also. d. would rise, but domestic output would fall.
For an investor who starts with pesos and wants to end up with pesos in the future, which of the following choices is an example of an uncovered international investment?
A. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and then, buy pesos at the future spot rate B. Buy a peso-denominated financial asset C. Sell pesos at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to buy the foreign currency D. Sell pesos at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to buy pesos