Under a fixed exchange rate system, to prevent the depreciation of the dollar as a result of a balance of payments deficit, the Fed will increase the demand for dollars by supplying a foreign currency from its reserve assets
Indicate whether the statement is true or false
TRUE
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Which of the following limit the direct creation of new jobs through foreign investment?
a. Availability of large number of unemployed workers b. Nature of the industries in which investment is allowed c. Low cost of setting up the capital-intensive industries d. High percentage of youth in the country's population e. Regulation on technology transfer
Government regulators sometimes set the price of a drug at its marginal cost of production without including a fair share of the global joint cost of research and development. Which of the following statements is true about this practice?
a. This behavior is highly unlikely because every country pays its fair share of the cost of research and development. b. Setting drug prices at the marginal cost of production expands the market and guarantees that total drug spending covers all costs, including fixed development costs. c. It assures consumers of the unlimited availability of the drug. d. The described practice is almost impossible because development costs are easily divided among consumers and prices to reflect differences in the relative benefits each receives. e. This practice is a classic example of free riding.
Contractionary monetary policy:
A. increases the U.S. interest rate and decreases the U.S. exchange rate. B. increases the U.S. interest rate and increases the U.S. exchange rate. C. lowers the U.S. interest rate and increases the U.S. exchange rate. D. lowers the U.S. interest rate and decreases the U.S. exchange rate.
Progressive wage taxes cause worker leisure/consumption budgets (with leisure on the horizontal axis) to become steeper as leisure increases.
Answer the following statement true (T) or false (F)