Answer the following statements true (T) or false (F)
1. As the price of U.S. dollars decreases, more foreign currency is required to purchase dollars.
2. If the exchange rate between the U.S. dollar and the Swiss franc changes from 75 cents per Swiss franc to $1 per Swiss franc, the dollar has depreciated, since its value has declined.
3. Appreciation of the U.S. dollar encourages travel abroad by U.S. citizens.
4. Under a system of floating exchange rates, exchange rates are allowed to rise or fall according to supply and demand.
5. A nation on the gold standard would convert its currency into gold on demand.
1. FALSE
2. TRUE
3. TRUE
4. TRUE
5. TRUE
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The negative slope of the production possibilities frontier represents the idea
A) that free lunches are possible. B) of tradeoffs, that in order to produce more of one good, the nation must produce less of another. C) of unemployment. D) of inefficient production. E) that prices rise as less is produced.
Why does the model of perfect competition imply that there will be an efficient allocation of resources among firms?
What will be an ideal response?
While producing less than the competitive output decreases social welfare, the same cannot be said about producing more than the competitive output
Indicate whether the statement is true or false
An advantage of automatic stabilizers is that this type of fiscal policy is not subject to:
a. imprecise knowledge of full-employment real GDP. b. special interest groups. c. lag time problems. d. All of these are true.