In what context does the use of real exchange rates make the most sense?
a. For determining if one nation's real GDP has increased faster than another nation's real GDP.
b. For determining if one nation's nominal GDP has increased faster than another nation's nominal GDP.
c. For calculating whether to purchase foreign or domestic stocks and bonds.
d. For determining changes in a nation's relative international competitiveness.
e. For calculating the cost of buying foreign goods and services.
.D
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A consumer has the following utility function for goods X and Y: U(X,Y) = 5XY3 + 10
The consumer faces prices of goods X and Y given by px and py and has an income given by I. a. Write out the Lagrangian expression for the consumer's utility maximization problem. b. Write out the first order conditions necessary for maximizing utility subject to the budget constraint. c. Show that the first order conditions imply the budget constraint and MRS condition. Provide the economic (i.e. non-mathematical) interpretation of these conditions – specifically, why are they necessary for the consumer to be at the optimal bundle? d. Solve for the Demand Equations, X*(px,py,I) and Y*(px,py,I) e. Show that the demand equations are homogeneous of degree zero. That is, show X*(cpx,cpy,cI) = X*(px,py,I) for any positive constant, c.
If a country's population growth rate exceeds the growth rate in its GDP, which of the following is true?
a. Per capita GDP is rising. b. Per capita GDP is not changing. c. Per capita GDP is falling. d. None of the above.
Refer to the information provided in Figure 6.7 below to answer the question(s) that follow.
Figure 6.7Refer to Figure 6.7. Along budget constraint AB, the price of good X is $10 and the price of good Y is $12. If the price of X increases to $15, the budget constraint will
A. pivot in at point A. B. pivot out at point A. C. pivot in at point B. D. shift in parallel to AB.
Everything else held constant, an increase in interest rates on student loans
A) increases the cost of a college education. B) reduces the cost of a college education. C) has no effect on educational costs. D) increases costs for students with no loans.