Which of the following best defines dollarization?
A. A country uses the U.S. dollar as well as its currency for all transactions.
B. A country adopts a foreign currency for all transactions basically eliminating its own monetary policy.
C. The central bank of a country agrees to exchange its own currency for U.S. dollars at a fixed exchange rate.
D. A country eliminates its own currency for international transactions and requires that all international transactions be conducted in U.S. dollars.
Answer: B
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If firms in a monopolistically competitive market are earning negative economic profits, it is likely that:
A. firms will enter the market. B. the firms in the market will expand to try to capture lower costs per unit. C. firms will exit the market. D. the firms in the market will shut down immediately.
When the production process extends over more than one year, the value of the final product is:
A. included in GDP for the year in which production began. B. included in GDP for the year in which production was completed. C. allocated equally to GDP in each year. D. allocated to GDP in each year according to the value added in that year.
To adjust nominal GDP for a given year to obtain real GDP, it is necessary to divide nominal GDP by the price index (expressed in hundredths) for that year.
Answer the following statement true (T) or false (F)
Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X, ceteris paribus.Table 1.3Production Possibilities for Brushes and CombsCombinationNumber of combsOpportunity Cost(Foregone brushes)Number of brushesOpportunity Cost (Foregone combs)J4 0NAK3 10 L2 17 M1 21 N0NA23 On the basis of Table 1.3, in the production range of 1 to 2 combs the opportunity cost of producing 1 more comb in terms of brushes is
A. 4. B. 1/2. C. 1/7. D. 2/17.