If a dollar invested in the United States yields the same return as a dollar's worth of yen invested in Japan, then it implies that:
a. purchasing power parity exists.
b. the foreign exchange market is in equilibrium.
c. the dollar/yen exchange rate is fixed.
d. interest rate parity exists.
e. both the currencies are pegged to a fixed amount of gold.
d
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Which of the following will increase investment spending?
a. More optimistic business expectations. b. An increase in interest rates. c. An increase in business taxes. d. A decrease in capacity utilization. e. All of these.
Aluminum Aces dumps wastewater into a creek they have owned for decades. The new neighbor, Ms. Franklin, has tried to grow bamboo along the creek where it enters her property, but the wastewater kills about $1,000 worth of her bamboo each year. She offers Aluminum Aces $600 per year to add a new filter, which costs $400, to their system so wastewater will no longer kill her bamboo. What is one characteristics of this case that fits the Coase theorem?
a. Both parties are worse off than before. b. Property rights are clearly defined. c. A positive externality is internalized. d. Transaction costs are indeterminable.
The production possibilities curve bows outward because
A) opportunity costs are decreasing as the production of a good increases. B) opportunity costs are increasing as the production of a good increases. C) opportunity costs are fixed as the production of a good increases. D) resources are of uniform quality.
A perfectly inelastic demand curve exhibits
A) zero responsiveness to changes in price. B) zero quantity demanded when there is a slight change in price. C) a change in quantity demanded that is proportional to the change in price. D) a change in quantity demanded that is always twenty percent of the change in price.