A fixed exchange rate can be maintained by a government as long as it has sufficient
A. supplies of its own currency.
B. foreign reserves.
C. gold and other precious metals.
D. tax revenues.
Answer: B
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The key idea of the aggregate expenditure model is that in any particular year, the level of GDP is determined mainly by
A) export spending. B) the level of aggregate expenditure. C) government spending. D) investment spending.
Refer to the above figure. Constant returns to scale exist
A. up to output Q2. B. after Q5. C. over the entire long-run average cost curve. D. from Q2 to Q5.
Why is the study of asymmetric information associated with the market for "lemons"?
A) Potential buyers of used cars have difficulty separating good used cars from bad used cars; bad used cars are often referred to as "lemons." B) Because there is little advertising in the market for lemons, buyers have difficulty determining the quality of lemons before they are purchased. C) Sellers of citrus fruit — lemons, oranges, grapefruit — know the difference between bad fruit and good fruit; buyers do not have this information. D) Most sellers of used cars have less information about their cars than the dealers who buy them; used cars are often referred to as "lemons."
If a nation is more productive than a trading partner, can it still gain from trade with that partner? Use the concepts of absolute and comparative advantage to explain
What will be an ideal response?