Using the GG-LL framework, analyze the effect of an increase in the size and frequency of sudden shifts in the demand for a country's exports
What will be an ideal response?
Such a change pushes LL upward and to the right. Thus, the level of economic integration at which it becomes worthwhile to join the currency rises. In general, increased variability in the product markets makes countries less willing to enter fixed exchange rate areas. This prediction helps explain why the oil price shocks after 1973 made countries unwilling to revive the Bretton Woods system of fixed exchange rates. See also Chapter 19.
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Which would be considered an investment according to economists?
A. The purchase of newly issued shares of stock in Microsoft. B. The sale of government bonds by the nation's central bank. C. The construction of a new computer chip factory by Intel. D. The purchase of shares of stock by Fidelity, a mutual fund company.
In a graph of choice sets, a price change affects the ratio but does not affect the budget line.
Answer the following statement true (T) or false (F)
Which is not an essential characteristic of a perfectly competitive market?
A. Goods are standardized. B. Buyers have perfect information. C. Goods from one seller cannot be distinguished from another's. D. Firms have limited market power.
Because a monopolist does not face competition from other firms, the outcome in a market with a monopoly
a. does not illustrate profit maximization. b. is often not in the best interest of society. c. is characterized by unlimited profits. d. would be improved if the government produced the product rather than a private firm.