When the monopoly firm is able to charge a higher price, the amount of ________ also increases, thus magnifying the importing nation's __________.
a. quota rents; losses
b. comparative advantage; gains from trade
c. profits; welfare
d. protection; employment gains
Ans: a. quota rents; losses
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An exporter can hedge against the possible decline in a foreign currency by purchasing
A) put options on the currency. B) call options on the currency. C) the currency on the spot market. D) currency on forward contracts.
Expansionary monetary policy will:
A. Reduce the lending capacity for banks. B. Raise interest rates. C. Encourage people to borrow more money. D. Reduce the equilibrium price level.
In the long run, what level of economic profits can a monopolistic competitor expect to receive?
A) positive B) zero C) negative D) either negative or positive, depending on the demand for its product and its costs
Suppose Acme County Bank and Trust has $1 million in total deposits and the required reserve ratio is 8%. How many dollars must the bank keep in its vaults or on deposit at a Federal Reserve Bank?
A) 0 B) $80,000 C) $920,000 D) $1,000,000 E) None of the above—it's the bank's own choice.