What determined the exchange rates among currencies under the gold standard, and what caused the gold standard to collapse?
What will be an ideal response?
Under the gold standard, the exchange rate between two currencies was automatically determined by the quantity of gold in each currency. The gold standard collapsed during the Great Depression because countries wanted to fight the Depression with expansionary monetary policy, but under the gold standard the central banks lacked control of the money supply.
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Equilibrium is reached where there is no inherent force causing quantity supplied or quantity demanded to change.
Answer the following statement true (T) or false (F)
A corrective tax equal to the external cost imposed on third parties levied on polluters will: a. eliminate all pollution
b. increase the level of pollution. c. force polluters to internalize the external cost resulting from their actions. d. usually have no impact whatsoever on pollution levels, but will generate tax revenue for the government.
In drawing a straight-line production possibilities curve for an economy that produces oil and corn, we assume that resources (for example, the number of labor hours)
a. are fixed b. increase at a constant rate c. increase at an increasing rate d. increase at a decreasing rate e. are not uniform, such as a variety of skills and quality of work
Price elasticity of demand indicates the consumer response to changes in:
A. Quantity. B. Demand. C. Price. D. Supply.