Under a fixed exchange rate system, if the inflation rate in the United States is 0 percent a year and the inflation rate in Australia is 5 percent a year, then the U.S. real exchange rate will:
A. remain constant.
B. increase 5 percent a year.
C. decrease 5 percent a year.
D. may increase or decrease.
Answer: C
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Refer to Figure 16.1. An increase in the corporate tax rate is best represented by a movement from
A) point A to point B. B) point B to point A. C) point A to point C. D) point C to point A.
Persons who have given up looking for work are classified as
A. unemployed. B. discouraged workers. C. in the labor force. D. temporarily unemployed.
A secure strategy is a strategy that:
A. randomizes over two or more available actions in order to keep rivals from being able to predict a player's action. B. results in the highest payoff to a player regardless of the opponent's action. C. describes a set of circumstances in which no player can improve her payoff by unilaterally changing her own strategy, given the other players' strategies. D. guarantees the highest payoff given the worst possible scenario.
If price is below the long-run competitive equilibrium level, there will be
A. Exit of firms from the market. B. Greater demand. C. Greater output. D. Positive economic profits.