If a central bank wants to keep the value of its home currency fixed in the foreign exchange market, then an increase in the demand for its home currency will lead the central bank to
A) do nothing.
B) sell its home currency.
C) buy its home currency.
D) sell foreign currencies.
Answer: B
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If the absolute value of the price elasticity of demand for cell phone service is 3, then if the price of cell phone service increases by 1%, quantity demanded would:
A. decrease by 3%. B. increase by 3%. C. increase by 0.33%. D. decrease by 0.33%.
Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
Which of the following does competition provide in a market economy?
a. centralized decision-making b. planning committees setting output quotas c. a regulator for the free market system d. government price controls
In a famous series of commercials, the International Ladies’ Garment Workers Union (ILGWU) urged buyers to “look for the union label” and to avoid buying clothes not made by ILGWU members. Through the commercials, the ILGWU tried to attain its goals by
A. restricting the number of ILGWU members. B. featherbedding. C. raising the marginal revenue products of ILGWU members. D. creating lower prices for goods made by ILGWU members.