Explain why the United States dollar became the postwar world's key currency
What will be an ideal response?
(1 ) The early convertibility of the U.S. dollar in 1945.
(2 ) The special position of the dollar under the Bretton Woods system.
(3 ) The strength of the American economy relative to the devastated economies of Europe and Japan.
(4 ) Central banks naturally found it advantageous to hold their international reserves in the form of interest-bearing dollar assets.
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The figure above shows a nation's production possibilities frontier for apples and oranges
a) What combination of goods is represented by point A? b) What combination of goods is represented by point B? c) Which point represents an unattainable combination of goods?
Rational people make decisions at the margin by
a. following marginal traditions. b. behaving in a random fashion. c. thinking in black-and-white terms. d. comparing marginal costs and marginal benefits.
If a firm in the long run produces less than its efficient scale, it
A) should raise its markup to increase its profit. B) should lower its markup to increase its profit. C) cannot be a perfectly competitive firm. D) should not advertise to increase its profit. E) must have its markup equal to zero.
If inflation is completely anticipated
A) borrowers lose in the economy. B) firms lose because they incur menu costs. C) lenders lose in the economy. D) no one loses in the economy.