Refer to the above figure. Suppose E is the original equilibrium. An increase in the demand for dollars will be reflected in this figure by
A. a decrease in the supply of yen as Japan is able to pay less for U.S. goods.
B. an increase in the supply of yen as Japan tries to buy more U.S. goods.
C. an increase in the demand for yen as both imports and exports increase.
D. a decrease in the demand for yen as the U.S. balance of payments improves.
Answer: B
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Explain why in the long run a firm that is cost minimizing will choose K and L where:
w/MPL = r/MPK What does this tell you about the marginal cost of increasing output through hiring labor and the marginal cost of increasing output through adding capital?
The supply curve of a depletable natural resource is usually
A. downward sloping because the resource runs out over time. B. upward sloping because more of the resource can be profitably extracted at higher prices. C. upward sloping because the price of the resource rises at the rate of inflation. D. vertical because the supply of the resource is fixed.
For some products, purchases tend to decrease as the buyer's income increases. Such products are known as:
a. Normal goods b. Inferior goods c. Inverse goods d. Common goods
Which statement is correct?
a. The discount rate is the rate banks charge one another on overnight loans b. The Federal funds rate is the rate banks charge their most creditworthy customers c. The real interest rate is greater than the nominal interest rate during periods of inflation d. The prime interest rate rises and falls with the Federal funds rate