When will the central bank of a country be concerned about the exchange rate?
A central bank will be concerned about the exchange rate for three reasons:
Movements in the exchange rate will affect the quantity of aggregate demand in an economy.
Frequent substantial fluctuations in the exchange rate can disrupt international trade and cause problems in a nation's banking system.
The exchange rate may contribute to an unsustainable balance of trade and large inflows of international financial capital, which can set the economy up for a deep recession if international investors decide to move their money to another country.
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The supply of euros is managed by
A) the European Monetary Union. B) the European Monetary System. C) the European Central Bank. D) the European Bank for Reconstruction and Development.
Which of the following situations will tend to feature economic rents that are much higher than the resource's opportunity cost?
a. Unskilled day labor on a construction site b. Generic lumber used in the construction of a commercial building. c. Wheat grown by one of the thousands of wheat farmers in the U.S. and bought by Kellogg to produce breakfast cereal d. An otherwise unemployable software engineer possessing unique knowledge required to resolve a particular company's latest software bug.
If there're no tax and imports, the relationship between the multiplier and the MPC is
What will be an ideal response?
Firms that exhibit price-taking behavior
A) wait for other firms to set price, take it as given, and charge a higher price. B) have outputs that are too small to influence market price and thus take it as given. C) take pricing behavior in their own hands. D) are independently capable of setting price.