What effect does the fixing of the nominal exchange rate have on the real exchange rate?
a. The real exchange rate is fixed at the same level.
b. The nominal exchange rate is fixed, but the real exchange rate varies with relative income levels.
c. The real exchange rate still fluctuates with relative international prices.
d. None of the above.
.C
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Suppose an economy produces milk and honey, and milk is plotted along the horizontal axis of the production possibilities frontier
If the production in the economy is centrally planned (and not market oriented) so that the MRS for the current production level is 3 but the MRT is 2, then there will be an excess ________ for milk and an excess ________ for honey. A) demand, supply B) demand, demand C) supply, demand D) supply, supply E) The market is in equilibrium, and there are no imbalances in supply or demand.
The quantity of funds supplied by lenders is: a. directly related to the rate of interest
b. inversely related to the rate of interest. c. unrelated to the rate of interest. d. first increases and then decreases with the rate of interest.
Which statement is true?
A. M1 is money, but not M2. B. M2 is money, but not M1. C. Both M1 and M2 are money. D. Neither M1 nor M2 is money.
In the short run, a perfectly competitive firm calculates the profit-maximizing (or loss-minimizing) production output by equating:
A) price and average variable cost. B) price and average total cost. C) price and marginal revenue. D) marginal revenue and marginal cost.