Suppose a U.S. firm purchases some English china. The china costs 1,000 British pounds. At the exchange rate of $1. 45 = 1 pound, the dollar price of the china is
A. $690.
B. $250.
C. $1,450.
D. $2,000.
Answer: C
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Answer the following statement(s) true (T) or false (F)
1. The slope of the budget line depends on the wage rate and the amount of human capital the worker has accumulated. 2. An increase in a worker's marginal productivity can cause an increase in the worker's non-labor income. 3. Human capital tends to increase over the course of a person's life. 4. Because people work more efficiently in periods of high productivity, they tend to work fewer hours because it does not take as long to complete assignments. 5. Unlike regular indifference curve analysis, that involving the labor consumption trade-off only includes income effects (not substitution effects) because labor only generates income.
Suppose a tax is imposed on a good. This will
A) increase the price paid by the buyer and decrease the price received by the seller. B) increase the price paid by the buyer but leave the price received by the seller unchanged. C) decrease the price received by the seller but leave the price received by the buyer unchanged. D) increase the price received by the seller and decrease the price paid by the buyer.
If the Federal Reserve wants to control the level of interest rates
A) it must keep the supply of money constant. B) it must let the money supply grow at a constant rate. C) it can do so only if it also stabilizes nominal GDP. D) it will have to give up control of the money supply.
Draw two SP curves intersecting LP; call the upper intersection point A and the lower point B. The Fed promises to reduce inflation while maintaining natural unemployment. If the public believes the Fed, the economy moves from ________
Then if the Fed turns out to be time-inconsistent, breaking its promise and trading off ________ inflation for lower unemployment, the public revises the way it forms inflation expectations so that in the long run the economy stays at ________. A) A to B, lower, B which is superior to A B) A to B, higher, A which is inferior to B C) A to B, lower, A which is superior to B D) B to A, higher, B which is superior to A E) B to A, lower, B which is inferior to A