Suppose that the nominal exchange rate between the U.S. dollar and the Mexican peso is 0.10 dollars per peso. If Mexico's inflation is 10 percent and the United States' inflation is 0 percent, from the U.S. point of view, the real exchange rate
A) appreciates to 0.11 dollars per peso.
B) depreciates to 0.11 dollars per peso.
C) appreciates to 0.09 dollars per peso.
D) depreciates to 0.09 dollars per peso.
B
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The reduction in average cost resulting from an increase in the volume of a good or services produced is called:
A) information cost B) transaction cost C) diminishing returns D) economies of scale
Managers need all of the following information to determine if the firm should make or buy an input except which one?
A) the salvage rate of the equipment to make the input B) the quantity of the input the firm needs each year C) the firm's discount rate D) the present value of the firm's current profit
The use of trade barriers to enforce standards abroad raises all of the following concerns EXCEPT
A) the potential deadweight losses in consumption and production at home. B) the lack of agreement over specific content of standards. C) the potential for the use of trade barriers to erupt into a bigger trade war. D) the difficulty of knowing whether some of the concerns are over standards or veiled protectionism. E) only small countries may be able to use trade barriers effectively.
The theory of public choice suggests that
A) government agencies tend to be inefficient because the people running them do not understand the concept of opportunity cost. B) government agencies tend to be inefficient because they are subject to institutional arrangements in which managers do not have an incentive to be efficient. C) the goods provided by government, whether public or private goods, are not scarce. D) you can lower your tax bill if you are careful not to consume too many government resources, regardless of what your neighbors do.