Refer to the diagram. The initial demand for and supply of pesos are shown by D 1 and S 1 . Suppose the United States reduces its imports of Mexican goods, shifting its demand for pesos from D 1 to D 2 . Under a system of freely floating exchange rates:
A. gold would flow from Mexico to the United States.
B. the peso price of dollars would rise from B pesos equals $1 to A pesos equals $1.
C. a problem of rationing a shortage of pesos would arise in the United States.
D. the dollar price of pesos would increase to C dollars equals 1 peso.
B. the peso price of dollars would rise from B pesos equals $1 to A pesos equals $1.
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Which of the following statements is true about the total utility provided by a good?
a. Total utility can never be negative. b. Total utility is maximized when marginal utility is maximized. c. Total utility continues to increase as more of the good is consumed. d. Total utility is maximized when marginal utility is zero (for total utility > 0). e. Total utility is maximized when marginal utility is zero (for total utility < 0).
An illiquid asset is one that is _______ but _______.
A. worth a lot in the future; can be sold today at its expected future price B. worth a lot in the future; can only be sold today at a low price C. worth a lot right now; not worth that much in the future, when it can be sold. D. worth a lot right now; cannot be sold until the future, when its value will be higher
Suppose that opportunity costs in India and Thailand are constant. In India, maximum feasible hourly production rates are either 0.3 unit of cloth or 0.2 unit of food. In Thailand, maximum feasible hourly production rates are either 0.5 unit of cloth or 0.5 unit of food. It is correct to state that
A. Thailand has a comparative advantage in producing cloth. B. India has a comparative advantage in producing both cloth and wheat. C. India has a comparative advantage in producing cloth. D. India has no comparative advantage in producing cloth or wheat.
A bank run is
A. the transfer of funds from one bank to another. B. a situation when a bank borrows from the Fed's discount window. C. a situation in which a bank borrows at the Federal funds rate. D. a large-scale, panicky withdrawal of deposits from a bank.