A market in which national currencies are traded by households, firms and governments, is referred to as a(n)
A) foreign exchange market.
B) fed funds market.
C) international reserves market.
D) gold certificate market.
Answer: A
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Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2 hamburger and a $1 soda. When he arrived, he discovered that hamburgers were on sale for $1 each, so Steve bought two hamburgers and a soda. Steve's response to the decrease in the price of hamburgers is best explained by
A. the price effect. B. a rightward shift in the demand curve for hamburgers. C. the substitution effect. D. the income effect.
If smartwatches are considered substitutes for smartphones, then the decline in the price of smartwatches would, all else equal
A) increase the demand for smartphones. B) decrease the quantity of smartphones demanded. C) decrease the demand for smartphones. D) increase the quantity of smartphones demanded.
Currency appreciation benefits importers
Indicate whether the statement is true or false
According to liquidity preference theory,
a. an increase in the interest rate reduces the quantity of money demanded. This is shown as a movement along the money-demand curve. An increase in the price level shifts money demand to the right. b. an increase in the interest rate increases the quantity of money demanded. This is shown as a movement along the money-demand curve. An increase in the price level shifts money demand leftward. c. an increase in the price level reduces the quantity of money demanded. This is shown as a movement along the money-demand curve. An increase in the interest rate shifts money demand rightward. d. an increase in the price level increases the quantity of money demanded. This is shown as a movement along the money-demand curve. An increase in the interest rate shifts money demand leftward.