Under a fixed exchange rate system, the central bank must
a. have an unlimited supply of domestic currency.
b. have a very large supply of foreign assets.
c. follow a constant money growth rule.
d. allow the money supply to adjust to keep interest rates and exchange rates unchanged.
B
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The Fed prefers to focus on inflation based on which price index?
A) personal consumption expenditures price index B) consumer price index C) GDP deflator D) producer price index
The net loss in welfare from a quota is proportionately larger than for a tariff because: a. it does not result in government revenue
b. the loss in consumer surplus is greater than the gain to producers and the government. c. it prevents nations from fully realizing their competitive advantage. d. it brings about higher prices and revenues to domestic producers.
A car sells at different prices at different dealerships in an oligopolistic market. If a consumer has imperfect information about the price of a car at each dealership, he should
a. always gather all available information about prices. b. gather information about prices until the expected marginal utility of more information equals the marginal cost of gathering it. c. gather information about prices only if it can be gathered without cost. d. ignore information about prices because it is irrelevant to making an "optimally imperfect" decision.
Refer to the information provided in Figure 5.5 below to answer the question that follows.
Figure 5.5Refer to Figure 5.5. As the price of good W increased, the demand for good Y shifted from D1 to D2. The cross-price elasticity of demand between W and Y is
A. negative. B. zero. C. positive. D. indeterminate from this information.