A decline in interest rates tends to expand the economy by depreciating the currency and raising net exports.
Answer the following statement true (T) or false (F)
True
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When price is less than average variable cost at the profit-maximizing level of output, a firm should:
A) continue to produce the level of output at which marginal revenue equals marginal cost if it is operating in the short run. B) continue to produce the level of output at which marginal revenue equals marginal cost if it is operating in the long run. C) shutdown, because it will lose nothing in that case. D) shutdown, because it cannot even cover all of its variable costs let alone its fixed costs if it stays in business.
In a fixed exchange rate system, rates are maintained by the central bank's ongoing purchases and sales of currencies
a. True b. False
Which of the following is an example of a positive externality?
a. Smoking a cigarette b. Driving a less fuel efficient vehicle c. Setting up a chemicals factory in a residential area d. Overuse of chemical fertilizers e. Beekeepers keeping bees for honey
Monopolistic competition is characterized by firms:
A. Producing differentiated products B. Making economic profits in the long run C. Producing at optimal productive efficiency D. Producing where price equals marginal cost