An increase in U.S. income that increases American demand for all normal goods (including imports from Britain) will shift
a. the U.S. demand curve for foreign exchange to the right, causing an increase in the dollar-per-pound exchange rate
b. the U.S. demand curve for foreign exchange to the left, causing a decrease in the dollar-per-pound exchange rate
c. the U.S. supply curve for foreign exchange to the right, causing a decrease in the dollar-per-pound exchange rate
d. the U.S. supply curve for foreign exchange to the left, causing an increase in the dollar-per-pound exchange rate
e. neither the U.S. demand curve for foreign exchange nor the U.S. supply curve for foreign exchange
A
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Suppose that Congress allocates $1 billion to clean up after hurricanes in 2016. It also raises taxes by $1 billion to keep the deficit from growing. If the marginal propensity to consume is 0.9, what is the effect on equilibrium GDP?
A) GDP increases by $900,000. B) GDP increases by $10 billion. C) GDP increases by $1 billion. D) GDP does not change.
Suppose you are the manager of Sweet Aroma, a firm that specializes in air freshener. To make your air freshener, you purchase apple skins from apple juice manufacturers. If the demand for apple juice decreases, this will cause the production of apple skins to ________ and the price of apple skins to ________.
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Bobby makes a New Year's resolution to lose weight. On January 3rd, he decides to go to Ben amp; Jerry's for ice cream instead of going to the gym. Using the concept of revealed preference, economists would most likely conclude that Bobby:
A. is not a rational individual. B. actually gains more utility from ice cream than working out. C. has changed his preferences. D. has no choice over the actions he takes.
Which of the following tools of commercial policy acts as a quantitative restriction on imports?
a. Tariff b. Subsidy c. Health and Safety regulations d. Quota e. Government procurement