To maintain a fixed exchange rate, in response to an increase in the government budget deficit the central bank must
a. sell foreign currency from reserves.
b. buy foreign currency.
c. raise taxes.
d. raise government spending.
e. pass a law that increases the exchange rate.
B
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Perfectly competitive markets will tend to under-allocate resources to nonexclusive public goods because:
a. these goods are produced under conditions of increasing returns to scale. b. no single individual can appropriate the total benefits provided by the purchase of such goods. c. these goods are best produced under conditions of monopoly. d. no private producer can provide the capital necessary to produce such goods.
An example of a good that is rival in consumption is:
A. a hamburger. B. radio signals broadcast over the air. C. national defense. D. public utilities.
Consider the labor market for short-order cooks. An increase in the wages paid to fast-food workers will cause
a. both equilibrium wages and equilibrium employment to increase in the market for short-order cooks. b. both equilibrium wages and equilibrium employment to decrease in the market for short-order cooks. c. equilibrium wages to increase and equilibrium employment to decrease in the market for short-order cooks. d. equilibrium wages to decrease and equilibrium employment to increase in the market for short-order cooks.
If a monopolistically competitive market became perfectly competitive, output probably would:
A. rise and then fall. B. fall. C. not change. D. rise.