Why does the appreciation of a country's currency tend to decrease its price level?
A. Domestic buyers tend to substitute domestic products for imports.
B. A currency appreciation makes a country's products more competitive in world markets, so exports rise.
C. A currency appreciation makes imported inputs more expensive.
D. A currency appreciation makes imported inputs less expensive.
Answer: D
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Microsoft wants to calculate the effect of a worldwide 5% price cut on its sales of Excel to clients in different countries. Microsoft sells Excel at different prices in U.S., Japan and Europe. Before the price cut U.S
sales were twice sales in Japan and Europe. If the price of elasticity of demand in the U.S., Japan and Europe are -3, -4, and -2 respectively, the worldwide sales rise by A) 10%. B) 15%. C) 20%. D) 25%. E) none of the above
Refer to the graph below.
In which curve does the opportunity cost of an additional unit of good Y decrease as more units of good Y are produced?
A. A B. B C. C D. D
The sale of Treasury securities by the Federal Reserve will, in general
A) not change the money supply. B) not change the quantity of reserves held by banks. C) increase the quantity of reserves held by banks. D) decrease the quantity of reserves held by banks.
Explain why the shape of the demand curve will determine how a shock to the market equilibrium affects price and quantity
What will be an ideal response?