Considering an economy with a current trade deficit and considering only the direct effect on income, an expansionary monetary policy tends to:
A. decrease the exchange rate and decrease the trade deficit.
B. decrease the exchange rate and increase the trade deficit.
C. increase the exchange rate and increase the trade deficit.
D. increase the exchange rate and decrease the trade deficit.
Answer: B
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Dan missed class the day the professor covered the circular flow model. Dan asked his friend Joan to explain markets to him. Joan correctly stated that a market
A) must have many buyers and only one seller, who is willing to sell to all the buyers. B) is only a place to purchase groceries. C) requires a physical location for buyers and sellers to get together. D) must include a written contract between buyers and sellers. E) is any arrangement that brings buyers and sellers together.
Hank requires 1 hour to cut the grass and 3 hours to clean the house. His sister Holly requires 1 hour to cut the grass and 4 hours to clean the house. Which of the following statements is true?
A) Hank has a comparative advantage in both cutting the grass and cleaning the house. B) Hank and Holly both have a comparative advantage in cutting the grass. C) Hank has a lower opportunity cost of cutting the grass. D) Hank has an absolute advantage in both cutting the grass and cleaning the house. E) Holly has a comparative advantage in cutting the grass.
In 2006, the base price of a Hummer SUV was about $30,000. By 2008 as gasoline prices increased,
A) the demand curve for Hummers shifted leftward and Hummer prices decreased. B) the demand curve for Hummers shifted rightward and Hummer prices increased. C) there was a movement down along the Hummer demand curve. D) there was a movement up along the Hummer supply curve.
Assume that you assign the following subjective probabilities for your final grade in your econometrics course (the standard GPA scale of 4 = A to 0 = F applies): Grade Probability A 0.20 B 0.50 C 0.20 D 0.08 F 0.02 The expected value is:
A) 3.0 B) 3.5 C) 2.78 D) 3.25