If an economy is represented by a point inside its production possibilities curve:
A. it can produce more of one product even if it does not produce less of another product.
B. it can produce more of one product only if it produces less of another product.
C. it cannot produce more of one product unless it stops producing the other product entirely.
D. it cannot possibly produce more of one product, even if it produces less of another product.
Answer: A
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If U.S. export contracts are written in terms of foreign currency and import contracts are denominated in domestic currency, a devaluation of the dollar during the currency contract period
A) should increase the dollar value of exports. B) should not have any effect on the dollar value of U.S. imports. C) must increase the BOT. D) All of the above
Explain what a dual exchange rate system is
What will be an ideal response?
The contagion effect refers to the fact that
A) deposit insurance has eliminated the problem of bank failures. B) bank runs involve only sound banks. C) bank runs involve only insolvent banks. D) the failure of one bank can hasten the failure of other banks.
Which of the following helps economists avoid double counting in computing of GDP?
a. Including goods and services produced only within a given area. b. Only include transfer payments made by the government and not individuals. c. Only include capital purchases by corporations and not by family-owned firms. d. Avoiding the use of intermediate goods in calculating GDP.