In Figure 24.1 total cost is represented by the area
A. CDFE.
B. ABFE.
C. ABGHE.
D. ABDC.
Answer: A
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If a McDonald's Big Mac cost $4.50 in the United States and 3.60 euros in the Euro area, then purchasing-power parity implies the nominal exchange rate is how many euros per dollar?
a. 1.25 If the value is less than this, it costs more dollars to buy a Big Mac in the U.S. than in the Euro area. b. 1.25 If the value is less than this, it costs fewer dollars to buy a Big Mac in the U.S. then in the Euro area. c. .80 If the value is less than this, it costs more dollars to buy a Big Mac in the U.S. than in the Euro area. d. .80 If the value is less than this, it costs fewer dollars to buy a Big Mac in the U.S. than in the Euro area.
The difference between the sale value of the product and the value of the inputs that went into it is called the:
A. value-added of that stage of production. B. profit margin. C. mark up. D. value of the final product.
A higher price reduces the quantity demanded for a product because:
A. The purchasing power of individuals increases B. The financial assets of individuals increase C. Individuals will buy more of the product and less of its substitutes D. Individuals can afford less of the product and will switch to substitutes
If the Fed were to attempt to increase the money supply, it would most likely do so
A) by manipulating the discount rate. B) by manipulating the required reserve ratio. C) by altering the amount of gold held in Fort Knox. D) by engaging in open market operations.