In the __________, the currency of a country with the higher inflation rate will __________ against the currency of a country whose inflation rate is lower
a. short run; appreciate.
b. short run; depreciate.
c. long run; appreciate.
d. long run; depreciate.
e. long run; remain stable.
D
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Which of the following is an example of someone with inflationary expectations taking a step designed to insulate themselves from the higher expected rates of inflation?
a. a consumer deciding to delay the purchase of a new home or automobile b. a consumer who borrows money at a fixed interest rate in order to purchase a new home or automobile c. an investor who borrows funds at an adjustable money interest rate (one that automatically increases with higher inflation) d. a home buyer who borrows funds at a variable interest rate
After the Revolutionary War, the U.S. monetary system was based on gold. Historically, why did the U.S. adopt the use of gold as a currency? How does this compare with the currency used today?
What will be an ideal response?
The theory of adaptive expectations points out that when a shift in aggregate demand occurs, people and businesses will rationally expect its impact on output and employment to be temporary and its impact on the price level to be permanent
a. True b. False Indicate whether the statement is true or false
Suppose that a firm produces both bottled water and carbonated soft drinks. It is cheaper for this firm to produce both goods than it would be if they were produced by two separate firms. Further, as this firm increases its production levels, the average costs of producing both bottled water and carbonated soft drinks fall. This firm experiences:
A. economies of scope and diseconomies of scale. B. both economies of scope and economies of scale. C. both diseconomies of scope and diseconomies of scale. D. diseconomies of scope and economies of scale.