In the 1970s, the Organization of Petroleum Exporting Countries (OPEC) tripled the price of petroleum, causing automobile manufacturers to look for ways to produce more fuel-efficient cars by substituting aluminum and plastic for steel. This was primarily a response to the economic question of:
A) When will each good be produced?
B) For whom shall the goods be produced?
C) What goods and services should a society produce?
D) How should goods and services be produced?
Answer: D) How should goods and services be produced?
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Suppose the development of the European Union leads to greater investment in Europe. You'd expect
A) a recession in Europe. B) a decline in the world real interest rate. C) a rise in the current account in Europe. D) an increase in the world real interest rate.
Monopolistically competitive firms can earn profits in the long run by:
A. monopolistically competitive firms only earn zero profits in the long run. B. continually innovating to differentiate their product. C. price discriminating. D. further minimizing their costs.
If all of the following examples are inelastic, which one will most likely have a decrease of revenue?
a. The price of cameras rises. b. The price of milk falls. c. The quantity supplied of lipstick declines. d. The quantity supplied of perfume remains constant.
Policy makers can select from a number of different exchange rate regimes. One of those options is a "hard peg." Which of the following best represents a hard peg?
A) a revaluation B) a currency board C) a flexible exchange rate regime D) the EMS E) none of the above