The demand for money
a. is the same as the demand for bonds
b. is the same as the supply of bonds
c. increases whenever the price level falls
d. reflects the constraints that people face
e. shows the people always demand as much money as possible
D
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For a seller who is a price taker, marginal revenue is always
A) less than marginal cost. B) more than marginal cost. C) the same as marginal cost. D) less than price. E) the same as price.
All of the following accurately describes China's currency peg EXCEPT
A) pegging against the dollar ensured that Chinese exporters faced stable prices on exports to the U.S. B) some U.S. firms complained that the peg gave Chinese firms an unfair advantage over U.S. firms. C) the Chinese currency was allowed to depreciate moderately in the years preceding the financial crisis. D) many economists argued that the Chinese currency was undervalued.
Answer the question on the basis of the following information. Assume that if the interest rate that businesses must pay to borrow funds were 20 percent, it would be unprofitable for businesses to invest in new machinery and equipment, so investment
would be zero. But if the interest rate were 16 percent, businesses would find it profitable to invest $10 billion. If the interest rate were 12 percent, $20 billion would be invested. Assume that total investment continues to increase by $10 billion for each successive 4 percentage point decline in the interest rate. Refer to the information. Which of the following is an accurate verbal statement of the described relationship? A. There is no regular or dependable relationship between business investment and the interest rate. B. The amount of business investment is unaffected by changes in the interest rate. C. Investment spending by businesses varies inversely with the interest rate. D. Investment spending by businesses varies directly with the interest rate.
Under a fixed exchange rate system, if the inflation rate of the United States exceeds the inflation rate of other nations, the:
A. dollar will depreciate. B. dollar will not change. C. United States will develop a trade deficit. D. United States will develop a trade surplus.