Explain how an increase or decrease in demand and supply will affect the value of a nation’s currency.
What will be an ideal response?
If the demand for a nation’s currency increases, other things equal, the currency of that nation will appreciate. Conversely, if the demand for a nation’s currency decreases, other things equal, the currency of that nation will depreciate.
If the supply of a nation’s currency decreases, other things equal, the currency of that nation will appreciate. Conversely, if the supply of a nation’s currency increases, other things equal, the currency of that nation will depreciate.
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Which of the following statements has usually held TRUE about the relationship between the trade deficits and government budget deficits?
A) There is a negative relationship between trade deficits and budget deficits. B) There is a positive relationship between trade deficits and budget deficits. C) There is no relationship between trade deficits and budget deficits. D) A relationship exists only when there is a balanced budget.
Arnold Harberger was the first economist to estimate the loss of economic efficiency due to market power. Harberger found that
A) the loss of economic efficiency in the U.S. economy due to market power was small around 1973, about 1 percent of the value of production, but has since grown to about 10 percent. B) because of the increase in the average size of firms since World War II, the loss of economic efficiency has been relatively large, about 10 percent of the value of total production in the United States. C) the loss of economic efficiency in the U.S. economy due to market power was less than 1 percent of the value of production. D) although the number of monopolies was small, the large number of other non-competitive firms in the United States resulted in a large loss of economic efficiency, about 20 percent of the value of total production.
Which of the following statements is correct with respect to endogenous growth models?
a. Changes in government policy that affect savings and investment rates can increase levels of output in the long-run. b. Changes in government policy that affect savings and investment rates can increase the growth rate of output in the long-run. c. Long-run growth rates are not stationary. d. both a and b. e. all of the above.
According to the theory of efficiency wages, firms operate more efficiently if wages are above the equilibrium level
a. True b. False Indicate whether the statement is true or false