If a central bank wants to keep the value of its home currency fixed in the foreign exchange market, then an increase in the demand for its home currency will lead the central bank to
A) do nothing.
B) sell its home currency.
C) buy its home currency.
D) sell foreign currencies.
B
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The law of diminishing marginal utility explains why
A. economists think that utility is a fallacy. B. consumers optimize by spending all of their income. C. individual demand curves have a negative slope. D. marginal utility rises as total utility falls.
Using the concept of income and substitution effects, explain how you might react to each of the following:
(a) You currently work 20 hours a week at $10 per hour and your employer tells you he must reduce your wage to $8 per hour. (b) The price of pizza doubles and the price of hamburgers remains constant.
An increase in lifetime wealth
A) increase current labor supply and increase current consumption demand. B) increase current labor supply and decrease current consumption demand. C) decrease current labor supply and increase current consumption demand. D) decrease current labor supply and decrease current consumption demand.
Which of the following is a result of monopolists producing fewer goods and selling them at a higher price than perfectly competitive firms?
a. The elimination of barriers to entry b. Losses c. Diseconomies of scale d. Positive economic profits