In the market for a particular pair of shoes, Jena is willing to pay $75 for a pair while Jane is willing to pay $85 for a pair. The actual price that each has to pay for a pair of shoes is $65. What is the combined amount of consumer surplus of Jena and
Jane?
A. $10
B. $30
C. $130
D. $215
B. $30
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In the short run, which factor is not relevant in profit-maximizing output decisions?
a. wage rates b. raw material costs c. mortgage costs d. energy costs e. market price
If the Fed decides to maintain a fixed euro/dollar exchange rate when they sell euros:
A. there will be pressure on domestic interest rates to increase. B. the domestic money supply will increase. C. they will have to impose capital controls. D. this will increase banking system reserves.
Explaining exchange rate behavior in the long run assumes that changes in price levels and real interest rates affect nominal exchange rates so that interest parity and PPP hold. Short-run deviations from PPP may be explained by an alternative theory called the:
a. relative PPP approach. b. asset approach to exchange rate determination. c. long-run equilibrium approach. d. law of one price.
Discouraged workers are people who have:
A. not looked for work in over a year because of the condition of the labor market. B. not looked for work in the past year but would take a job if one was offered to them. C. looked for work in the past year but decided to leave the labor market to go back to school, retire, or be a stay-at-home parent. D. looked for work in the past year but have given up looking because of the condition of the labor market.