What is the difference between black and parallel markets for foreign exchange? How are these created?
What will be an ideal response?
As a result of government restrictions or legal prohibitions on foreign-exchange transactions, markets in foreign exchange develop to satisfy trader demand. When these markets are deemed illegal, then the alternative market is known as a black market. On the other hand, when the alternative market is allowed to flourish, then it is known as a parallel market.
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Which of the following factors could start a demand-pull inflation?
A) an increase in the money wage rate B) an increase in tax rates C) a decrease in the money wage rate D) a decrease in government expenditure E) an increase in the quantity of money
In reference to table 22.1, the $600 paid in property taxes counts as
A. A variable cost. B. A normal cost. C. An explicit cost. D. An implicit cost.
The reason why people are charged for an additional can of soda they get from a soda machine, but are not charged for an additional paper taken from a newspaper dispensing machine, is that the marginal utility of an additional:
A. Soda is close to zero, but the marginal utility of an additional paper diminishes slowly B. Soda diminishes slowly, but the marginal utility of an additional paper is close to zero C. Soda increases by more than that of the newspaper as consumption increases D. Newspaper increases by more than that of soda as consumption increases
Suppose the Fed buys $1 billion worth of bonds and the required reserve ratio is 20%. In the theoretical limit, the money supply could
A) decrease by $1 billion. B) increase by $1 billion. C) increase by $5 billion. D) decrease by $5 billion.