International trade under a floating exchange rate system
A. has been trouble-free owing to the stabilizing role of speculators in the currency markets.
B. has suffered from so many problems that the volume of trade has declined significantly.
C. exposes businesses to unavoidable risks when exchange rates change.
D. has been subject to wild runs on currencies that were on the verge of devaluation.
Answer: C
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According to the intertemporal substitution effect, a fall in the price level will
A) decrease the real value of wealth, which increases the quantity of real GDP demanded. B) cause the interest rate to fall so that investment increases and the quantity of real GDP demanded increases. C) increase net exports, which causes the quantity of real GDP demanded to increase. D) increase the real value of wealth, which raises the interest rate so that the quantity of real GDP demanded decreases.
If a firm produces 8 units of output with average fixed cost=$40 and average variable cost=$25, what is its total cost?
a. $200 b. $1,000 c. $520 d. $320
Which of the following is the reason supply curves typically slope upward?
a. Opportunity cost of production increases as quantity supplied increases. b. Supply increases as opportunity cost decreases. c. Price increases as supply decreases. d. Quantity supplied is unrelated to price. e. The income and substitution effects of a price change.
In order to understand how the economy works in the short run, we need to
a. study the classical model. b. study a model in which real and nominal variables interact. c. understand that "money is a veil.". d. understand that money is neutral in the short run.