In some countries the U.S. dollar is used as a unit of account rather than the local currency. The primary reason for this is that
A. the U.S. inflation rate is higher than the local inflation rate.
B. the nation has been running a trade surplus.
C. U.S. dollars reduce the need to change prices frequently.
D. the nation has been running a trade deficit.
Answer: C
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When one firm can supply many goods through simultaneous production at higher savings,
A. it has achieved peak production. B. it has vertically integrated. C. it has horizontal integration. D. it has economies of scope.
The two sectors of the economy in the simple circular flow model are
A) the employed and the unemployed. B) households and businesses. C) foreign markets and domestic markets. D) the private sector and the public sector.
Why is the competitive equilibrium price often referred to as the market clearing price?
What will be an ideal response?
When laws and regulations prohibit firms from selling at "prices less than cost,"
A) consumers benefit. B) they are rarely enforced; therefore, competition is allowed to decline in the retailing industry. C) they help maintain competition by eliminating one important advantage of large firms. D) they must define "cost" arbitrarily since no firm has an incentive to sell below cost. E) they serve as our most effective defense against predatory pricing.