Most borrower-spenders in the financial system are
A) businesses and governments.
B) banks and thrift institutions.
C) households and foreigners.
D) governments and financial institutions.
A
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The establishment of the Euro as a unit of account in 1999 meant that from then on the currencies of the participating countries traded at a fixed rate, until the Euro completely replaced these currencies in the year 2002
(a) How would the inflation rates of these countries have to had been in these transition years for PPP to hold? (b) If the inflation of Italy was twice as high as that of Germany a year between 1999 and 2002, what can we say then about the Italian lira against the German mark? (c) What does the concept of PPP thus tells us about what needs to happen for such this monetary agreement to work for a long period of time?
Assume the costs of production in the U.S. auto industry are rising and, at the same time, the prices of Japanese-made autos are decreasing. What would reasonably be expected to happen to the equilibrium price and quantity of U.S.-made autos?
A) Price will increase; quantity cannot be determined. B) Price will decrease; quantity cannot be determined. C) Quantity will increase; price cannot be determined. D) Quantity will decrease; price cannot be determined.
If labor markets are competitive, discriminating employers
a. will have to pay higher wages since the available labor supply is smaller. b. will have higher costs and therefore be at a competitive disadvantage. c. will be driven out of business by nondiscriminators. d. All of the above are true.
Which of the following is not a reason that the CPI overstates the cost of living?
A. Quality improvements are not adequately incorporated. B. There are too frequent updates of the market basket. C. The tendency to substitute to nearly equivalent goods is not adequately accounted for. D. The location of typical purchases is not adequately updated.