In a flexible exchange-rate system, the value of a currency is determined by
A) the government.
B) the intersection of the IS and LM curves.
C) the demand and supply for the currency in the foreign exchange market.
D) Swiss gnomes.
C
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The global financial crisis showed the need for increased financial regulation, however, too much or poorly designed regulation could
A) choke off financial innovation. B) increase the efficiency of the financial system. C) increase economic growth. D) increase international financial integration.
People view alcohol and marijuana as perfect substitutes. This means that
A) individuals will consume either alcohol or marijuana, but not both, regardless of price. B) as the price of alcohol decreases, marijuana use decreases. C) the marginal utility for alcohol and marijuana is constant. D) Both B and C.
The above figure shows the demand and cost curves facing a monopoly. If a $100 per unit tax is charged, the loss in welfare resulting from the tax is
A) $250. B) $312.50. C) $1,250. D) $1,562.50.
Why is oligopoly more difficult to model than competition or monopoly?