Holding all else constant, a decrease in the real interest rate on U.S. assets will ________ the demand for dollars in the foreign exchange market and ________ the equilibrium Mexican peso/U.S. dollar exchange rate.
A. increase; decrease
B. decrease; decrease
C. decrease; increase
D. increase; increase
Answer: B
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Imperfect information on the part of buyers and sellers
A. cannot persist in a market economy. B. is no longer a problem because the "truth-in-advertising" regulations have been instituted. C. will not stop the economy from achieving market efficiency, assuming the other conditions for market efficiency hold. D. remains a barrier to achieving market efficiency, at least in some industries.
In the long run, those who are hurt by the minimum wage are
a. employers in non-minimum wage industries b. employers who have to pay more c. consumers who have to pay more for goods d. all of these
If there was a federal budget surplus and the government decided to either increase spending or decrease taxes,
A. The budget surplus would get smaller. B. The budget surplus would remain unchanged. C. The budget surplus would get larger. D. None of the choices are correct.
Refer to the accompanying figure. Assume the market is originally at point W. Movement to point Z is a combination of:
A. an increase in supply and an increase in quantity demanded. B. an increase in supply and an increase in demand. C. a decrease in supply and an increase in quantity demanded. D. an increase in demand and an increase in quantity supplied.