A market in which national currencies are traded by households, firms and governments, is referred to as a(n)
A. fed funds market.
B. foreign exchange market.
C. international reserves market.
D. gold certificate market.
Answer: B
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If at a given wage, the quantity supplied of labor exceeds the quantity demanded of labor:
A) the wage rate will fall. B) the wage rate will increase. C) the aggregate price index will rise. D) the aggregate price index will fall.
Suppose there is a water shortage, and the governor proposes that the government distribute equal quantities of water to each person at no cost to the consumers
If consumers were forbidden to trade water, would such a distribution be Pareto optimal? A) Yes, because each person has the same amount of water as everyone else. B) Yes, because everyone would be receive their water for free. C) Not necessarily, as people may differ in their marginal rates of substitution between water and other goods. D) It is impossible to determine without knowing the price of water. E) none of the above
Suppose the Fed pursues a policy that leads to higher interest rates in the United States. How will this policy affect real GDP in the short run if the United States is an open economy? This policy
A) increases investment spending, consumption spending, and net exports, all of which increase GDP. B) reduces investment spending, consumption spending and net exports, all of which reduce GDP. C) reduces investment spending and consumption spending, both of which reduce GDP. Net exports rise which increases GDP. D) reduces investment spending and consumption spending, both of which reduce GDP. Net exports fall which increases GDP.
The more broadly a good is defined
a. the more substitutes it has, so demand will be more price-elastic b. the less substitutes it has, so demand will be more price-elastic c. the more substitutes it has, so demand will be less price-elastic d. the less substitutes it has, so demand will be less price-elastic e. has no effect on the good's price elasticity of demand