When the exchange rate between the U.S. dollar and the euro changes from 1.30 euros per dollar to 1.00 euro per dollar the dollar has ________ and European goods have become ________ to people in the United States so that quantity of U.S
dollars supplied ________.
A) appreciated; more expensive; decreases
B) depreciated; cheaper; increases
C) depreciated; more expensive; decreases
D) depreciated; cheaper; decreases
E) appreciated; cheaper; increases
C
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
Adam Smith’s discussion of the production in a pin factory illustrates the law of comparative advantage.
Answer the following statement true (T) or false (F)
If investment is interest-insensitive,
A) monetary policy has no impact on equilibrium income. B) monetary policy has no impact on the equilibrium interest rate. C) fiscal policy has no impact on equilibrium income. D) fiscal policy has no impact on the equilibrium interest rate.
Suppose Island Bikes, a profit-maximizing firm, is the only bike rental company in a small resort town. The marginal cost to Island Bikes of renting out a bike is $3, and Island Bikes has no fixed costs. Each day Island Bikes has six potential customers, whose reservations prices are listed in the table. CustomerReservation Price($/Rental)A22B16C12D8E6F4If Island Bikes charges a single price to all of its customers, then what price will it charge?
A. $16 B. $8 C. $4 D. $12