With floating exchange rates, BOP equilibrium is restored by
A) trade restrictions.
B) earnings from foreign investments.
C) exchange rate changes.
D) All of the above.
C
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A structured and simplified version of reality that can be used to explain real-world behavior is called
A) an economic model. B) a rationality assumption. C) a postulate. D) a normative alternate reality.
A seller is willing to sell 5 units of a good at a minimum price of $1 per unit. The reservation value of the seller in this case is:
A) $1. B) $5. C) $6. D) $10.
Which of the following is the BEST example of a private good?
A) a can of Mountain Dew B) fish in the ocean C) cable television D) national defense
In the liquidity trap, the money demand curve
A) is horizontal. B) is vertical. C) is negatively sloped. D) is positively sloped.