When the marginal utility of the first good drops lower than that of a second good, it is rational for a consumer to ______.
a. buy mostly the first good and a little of the second good
b. buy mostly the second good and a little of the first good
c. buy only the second good until the marginal utility equalizes
d. buy only the first good until the marginal utility equalizes
c. buy only the second good until the marginal utility equalizes
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Suppose the Canadian central bank wants to keep the exchange rate of the Canadian dollar with the U.S. dollar constant over time. An increase in the demand for Canadian goods by American residents will lead the Canadian central bank to
A) sell American goods in exchange for Canadian dollars. B) buy more Canadian goods with Canadian dollars. C) increase the demand for Canadian dollars in the foreign exchange market. D) increase the supply of Canadian dollars in the foreign exchange market.
There is only one gas station within hundreds of miles. The owner finds that when she charges $3 a gallon, she sells 199 gallons a day, and when she charges $2.99 a gallon, she sells 200 gallons a day. The marginal revenue of the 200th gallon of gas is:
a. $.01. b. $1. c. $2.99. d. $3. e. $600.
A flexible or floating exchange rate system is one in which the:
a. government closely monitors and controls the value due to the impact on trade flows. b. government makes no attempt to fix it against any base currency. c. government actively tries to achieve fluctuations in the rate. d. government fixes the rate against the currency of its largest trading partner.
The U.S.'s high trade deficit must be balanced by:
A. high net capital outflows. B. low net capital outflows. C. net capital inflows. D. None of these statements is true.