A major problem with countries setting fixed exchange rates for their currencies is
A. The fixed rate will have to be maintained by currency market intervention.
B. Some participating countries are likely to experience continuing balance-of-payments deficits.
C. The foreign exchange reserves of participating countries will always be depleted.
D. Import and export prices will probably become more unstable.
Answer: A
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Figure 4-16
Refer to . Some policymakers have argued that the government should establish a "living wage." A living wage would provide workers a reasonable standard of living in their city or region. If a living wage of $10 per hour is established in the market pictured here, we would expect
a.
employment will increase to 14 million.
b.
employment will decrease to 8 million.
c.
the wage will actually rise to $20 per hour.
d.
there will be a surplus of 14 million workers.
Knowing that the presence of externalities reduces surplus, it implies that:
A. there are mutually beneficial trades waiting to be exploited, so government has an incentive to force those parties to solve the problem themselves. B. government needs to find them and correct the market. C. there are mutually beneficial trades waiting to be exploited so private parties have an incentive to solve the externality problem themselves. D. None of these statements is true.
As one moves down a straight-line, down-sloping demand curve, price elasticity will:
A. change from elastic, to unit elastic, then to inelastic. B. remain the same between any two points. C. change from inelastic, to elastic, then to unit elastic. D. change from unit elastic, to elastic, then to inelastic.
Given that Sandy can produce 10 economics reports or 2 sales calls and Tim can produce 2 economics reports or 1 sales call, which of the following is FALSE?
A) Sandy has a comparative advantage in sales calls. B) Tim has a comparative advantage in sales calls. C) Sandy has a comparative advantage in economics reports. D) Sandy has an absolute advantage in both economics reports and sales calls.