For American buyers, there is a decrease in the relative prices of Japanese goods when the ________.
A. inflation rate in Japan is higher than the inflation rate in the United States and there are fixed exchange rates
B. inflation rate in the United States is higher than the inflation rate in Japan, and there are flexible exchange rates
C. yen appreciates
D. dollar appreciates
Answer: D
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When profits are the result of pure luck, they can be distinguished from profits attributable to correct predictions by
A) asking the people who profited. B) finding out whether the profits were earned through effort. C) no known empirical criteria. D) whether or not they were generally anticipated.
The marginal productivity principle says that a profit-maximizing firm should
a. hire capital until its marginal product is zero. b. hire labor until another worker costs more to hire than he can earn for the firm. c. hire the quantities of capital and of labor at which their marginal products are equal. d. hire capital until its marginal product is negative.
Assume the price of Coca-Cola increases. As a result, your real income decreases and you decrease the quantity of Coca-Cola purchased each month. This is an example of the:
A. income effect. B. consumer price effect. C. revenue effect. D. substitution effect.
When the housing bubble popped, the effect of the negative demand side shock and the negative supply side shock were the same on:
A. output, causing it to definitely decrease. B. prices, causing them to definitely rise. C. output, causing it to definitely increase. D. prices, causing them to definitely fall.