Suppose the Chinese central bank wants to keep the exchange rate of its currency value constant over time. An increase in the demand for Chinese goods by American residents will lead the Chinese central bank to
A) coordinate with the U.S. central bank in order to increase the supply of the U.S. dollar in the foreign exchange market.
B) increase the demand for the Chinese currency in the foreign exchange market.
C) use its dollar reserves to buy the Chinese currency in the foreign exchange market.
D) sell the Chinese currency in exchange for U.S. dollars in the foreign exchange market.
Answer: D
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In perfect competition, the elasticity of demand for the product of a single firm is
A) 0. B) between 0 and 1. C) 1. D) infinite.
In the Primary Metals industry, it is estimated that the elasticity of output with respect to labor is 0.51 and the elasticity of output with respect to capital is 0.73
These two measures indicate that the primary metals industry is characterized by A) decreasing returns to scale. B) constant returns to scale. C) increasing returns to scale. D) no returns to scale.
In 2010, the imaginary nation of Mainland had a population of 6,000 and real GDP of 120,000 . In 2011 the population was 6,200 and real GDP of 128,960 . Over the year in question, real GDP per person in Mainland grew by
a. 2 percent, which is high compared to average U.S. growth over the last one-hundred years. b. 2 percent, which is about the same as average U.S. growth over the last one-hundred years. c. 4 percent, which is high compared to average U.S. growth over the last one-hundred years. d. 4 percent, which is about the same as average U.S. growth over the last one-hundred years.
If regulators set a price according to marginal cost pricing, the firm will ______.
a. earn positive economic profits b. make zero economic profits c. suffer an economic loss d. earn the same level of profits as it would absent regulation