Today, the most common exchange rate arrangement in the world is
A. the fixed exchange rate system.
B. the managed floating system.
C. the gold standard system.
D. the freely floating exchange rate system.
Answer: A
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The above table gives data on two variables. If these data were graphed, the slope of the line would be
A) 1. B) -2. C) 2. D) -4.
If a bank uses $500 of excess reserves to make a new loan when the reserve ratio is 8 percent, this action by itself initially makes the money supply
a. and wealth increase by $500. b. and wealth decrease by $500. c. increase by $500 while wealth does not change. d. decrease by $500 while wealth decreases by $500.
Assume that the distance between the two lines at Y1 equals the distance between the two lines at Y2. Which of the following must be true?
a. The amount businesses at Y1 need to produce to reach equilibrium equals the amount businesses at Y2 need to cut back on production to reach equilibrium.
b. The amount businesses at Y1 need to produce to reach equilibrium equals the amount businesses at Y2 currently maintain in inventory.
c. The amount of unplanned inventory investment businesses have made at Y1 equals the amount of planned inventory investment businesses have made at Y2.
d. The amount of planned inventory investment businesses at Y1 have made equals the amount of unplanned inventory investment businesses at Y2 have made.
Comparative advantage implies choosing the activity that
A) has a high opportunity cost. B) is inside the production possibilities frontier. C) has the lowest opportunity cost. D) does not demand any specialization.