In the Mundell-Fleming model, all of the following are true EXCEPT:
a. the intersection of the IS and LM curves determine the equilibrium exchange rate.
b. the BP curves position is determined by the exchange rate.
c. the policy choice between fixed and floating exchange rates shifts the BP curve.
d. the extent of capital mobility determines the slope of the BP curve.
e. all of the above are true.
A
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Refer to Table 11.1. What is the value of the marginal propensity to consume?
A) 0.15 B) 0.6 C) 0.75 D) 0.9
Explain how the market for gasoline would react to this price ceiling if the oil-producing nations increased production and drove the equilibrium price of gasoline to $2.50 a gallon. Would the U.S. gasoline market be effi-cient?
What will be an ideal response?
Marginal profit is the slope of the total profit curve.
Answer the following statement true (T) or false (F)
A price floor set above the equilibrium price is binding
a. True b. False Indicate whether the statement is true or false