Why would people outside the United States choose to hold dollars?
What will be an ideal response?
At times, many countries experience high inflation and their households and firms switch to using dollars instead of their domestic currency. Some countries use the dollar as legal tender. Also, during the financial crisis of 2007-2009, many foreigners chose to hold dollars as a safe haven.
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Suppose a consumer is torn between buying a Chevy Tahoe or a Ford Expedition, each selling for $30,000. He eventually decides on the Tahoe. What's his opportunity cost?
A) $30,000 B) $30,000 plus taxes, tags, insurance, etc. C) The satisfaction he would have experienced owning the Ford Expedition D) The frustration he will face owning the Chevy Tahoe E) B, C, and D above.
The combined effect of a real wage increase is that
A) the income effect always dominates, leading to fewer hours worked at a higher wage. B) the substitution effect always dominates, leading to more hours worked at a higher wage. C) if the substitution effect outweighs the income effect, the labor supply curve slopes downward, but if the income effect outweighs the substitution effect, the labor supply curve slopes upward. D) if the substitution effect outweighs the income effect, the labor supply curve slopes upward, but if the income effect outweighs the substitution effect, the labor supply curve slopes downward.
When two people are on the contract curve, the allocation of goods
A) cannot be improved. B) is pareto efficient. C) is such that neither individual can be made better off without making the other worse off. D) All of the above.
Who guarantees that prices in the foreign exchange market are identical all over the world?
a. Governments. b. Supranational organizations. c. Central banks. d. Tourists. e. Arbitrageurs.