In which situation is the real value of 1 unit of currency the highest?
a) A Big Mac that costs 4 pounds in London.
b) A Big Mac that costs 450 yen in Tokyo.
c) A Big Mac that costs $4.75 in New York City.
d) A Big Mac that costs 7 Swiss Francs in Zurich.
Ans: a) A Big Mac that costs 4 pounds in London.
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Sam spends all of his income on textbooks and hot dogs. The price of a textbook is $40 and the price of a hot dog is $0.50
If Sam is maximizing his utility and the marginal utility he derives from the last textbook he purchases is 400, then the marginal utility he derives from his last hot dog purchased must be A) 400. B) 10. C) 5. D) 20.
Refer to Figure 2-11. If the two countries have the same amount of resources and the same technological knowledge, which country has an absolute advantage in the production of cotton?
A) They have the same advantage. B) Pakistan C) Indonesia D) cannot be determined
Holding all else constant, when interest rates fall,
(a) yields on common stocks rise above yields on bonds. (b) yields on common stocks fall below yields on bonds. (c) yields on common stocks and bonds rise at an equal rate. (d) yields on common stocks and bonds fall at an equal rate.
In the above figure, an increase in aggregate demand has resulted in
A) a decline in the price level. B) economic growth. C) an inflationary gap. D) a recessionary gap.