If the Federal funds rate:
A. Increases, the prime interest rate will decrease
B. Decreases, the prime interest rate will increase
C. Increases, the prime interest rate will increase
D. Decreases, the prime interest rate will not change
C. Increases, the prime interest rate will increase
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Some early forms of money, like commodity money, did not survive because
A) they were outlawed. B) quality control was difficult. C) people disagreed on which good to use. D) paper quality was poor.
The ability to set a price greater than marginal cost guarantees an economic profit for the monopolistic competitor (assuming P > AC)
Indicate whether the statement is true or false
Which of the following is not true of the terms of trade?
a. They are determined by supply and demand factors. b. They lie somewhere between the opportunity costs of the trading partners. c. GATT begins negotiations on the terms of trade. d. They depend on negotiations between trade partners. e. They often favor one partner more than the other.
Imagine that there are only two nations in the world, the United States and Mexico. If Mexico experiences a drop in the price of foreign exchange, people in Mexico will
a. have to buy more U.S. currency, because prices of imports from the United States will have increased b. end up buying less U.S. currency, because U.S. prices on goods will decrease to everyone c. be able to afford less U.S. currency, and imports from the United States will be more expensive d. be able to afford more U.S. currency, and imports from the United States will be cheaper e. be able to afford more U.S. currency, and imports from the United States will be more expensive