According to the equation of exchange, if M = $100, V = 4, and Y = $200, then P equals
A. 20.
B. 2.
C. 40.
D. 500.
Answer: B
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If the nominal exchange rate were to be expressed as the number of units of domestic currency per unit of foreign currency, and that rate increases, then the domestic currency has:
A. appreciated. B. depreciated. C. become undervalued. D. become overvalued.
A production possibilities curve with quantities of clothing and food on the axes shows which of the following?
I. A society cannot have an unlimited amount of each good. II. For an efficient society, an increase in clothing production will necessitate a decrease in food production. III. A society will always produce the maximum amount of both clothing and food. A) I only B) II only C) III only D) Both I and II
In a perfectly competitive situation, the profit-maximizing hiring situation for all inputs being used is where
A) the MRP of each input is equal to the price of each input. B) the MRP of each input is greater than the price of each input. C) the MRP of each input is less than the price of each input. D) There is no relationship between MRP and the prices of the inputs.
If a firm is a profit maximizer and faces positive marginal costs,
A) there is a natural limit to the size of the firm, where MR = 0. B) there is no natural limit to the size of the firm; it can be as large as it wants to be. C) there is a natural limit to the size of the firm, where MR > 0. D) there is no natural limit to the size of the firm, hence the need for government regulation.