When analyzing the complete model, which can predict short-run and long-run changes in the exchange rate, one must:

a. start with short-run changes and move toward long-run changes, and thereby determine expectations.
b. use only the long-run model because the short-run model is largely irrelevant.
c. start with the long-run equilibrium positions where expectations of future exchange rates can be determined, and use those expectations to feed into the short-run model.
d. use the short-run model only, because the long run is only a theoretical concept.


Answer: c. start with the long-run equilibrium positions where expectations of future exchange rates can be determined, and use those expectations to feed into the short-run model.

Economics

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Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. CalculatorsPer HourComputersPer HourSmith10010Jones1206Suppose Smith and Jones begin by producing 16 computers and 0 calculators per hour. If they wish to produce 14 computers and 40 calculators per hour efficiently, then Smith should spend ________, and Jones should spend ________.

A. 30 minutes on each; 30 minutes on each B. 1 hour on computers; 40 minutes on computers and 20 minutes on calculators C. 1 hour on computers; 20 minutes on computers and 40 minutes on calculators D. 45 minutes on computers and 15 on calculators; 1 hour on calculators

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All of the following are characteristics of perfect competition EXCEPT

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Economics