The Fed in the U.S
A) allows a flexible exchange rate, though their actions can impact the exchange rate.
B) has no influence on the exchange rate.
C) sells U.S. dollars to China in an attempt to depreciate the U.S. dollar.
D) alternates between a flexible, fixed, and crawling peg exchange rate policy depending on economic conditions.
A
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If textbook prices rise by 5% this year, and textbook purchases fall by 5% this year, then the price elasticity of demand is:
A) .05. B) .10. C) .55. D) .95. E) 1.0.
What does it mean to say that an individual or a firm has internalized an externality?
What will be an ideal response?
Assuming that good "x" is measured on the x-axis and good "y" is measured on the y-axis, if the utility for the two goods "x" and "y" can be measured as U = y, then it can be concluded that
A) "x" and "y" are perfect complements. B) "x" is a "bad". C) the indifference curves on the x,y graph are upward sloping. D) the indifference curves on the x,y graph are horizontal.
Mel is thinking of going on a cruise. Mel values a cruise in nice weather at $2,000 and values a cruise in bad weather at $50. The probability of nice weather is 60 percent and the probability of bad weather is 40 percent. Trip insurance is sometimes available. If purchased, it allows travelers to delay the cruise until the weather is nice. Suppose that the price of the cruise is $1,200. If Mel is risk-neutral, then Mel should:
A. only buy trip insurance if it costs less than $20. B. not buy trip insurance. C. only buy trip insurance if it costs less than $780. D. only buy trip insurance if it costs less than $50.