Large, advanced economies like the United States, Japan, and the euro area generally:
A. give exclusive control of exchange rates to their respective central banks.
B. allow supply and demand to determine exchange rates.
C. use fixed exchange rates to promote stability.
D. allow their respective Treasuries to determine the exchange rates.
Answer: B
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Without restrictions, the market supply curve is horizontal at P = 5, and the inverse demand curve for taxi cab rides is P = 20 - Q in a competitive market. Subsequently, only 10 taxi cabs are allowed in the market
This results in a deadweight loss of A) 0. B) 5.5. C) 12.5. D) 25.
Use the following diagrams to answer the next question.
Assume the economy is on aggregate demand AD4. The Fed should ________.
A. move from MS1 to MS2 to lower interest rate and lower investment. B. move from MS1 to MS2 to lower interest rate and increase investment. C. move from MS1 to MS3 to raise interest rate and lower investment. D. move from MS1 to MS3 to raise interest rate and raise investment.
The automatic mechanism ________ the price level in the case of ________ and ________ the price level in the case of ________
A) raises; recession; lowers; expansion B) lowers; expansion; lowers; recession C) raises; expansion; raises; recession D) lowers; recession; raises; expansion
Acid rain is an example of a negative externality.
Answer the following statement true (T) or false (F)