Related to the Economics in Practice on page 666: Trade ________ comparative advantage of countries and ________ the efficiency of firms.
A. inhibits; improves
B. inhibits; reduces
C. exploits; improves
D. exploits; reduces
Answer: C
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Net public debt is
A) the excess of annual tax revenues over annual government spending. B) the sum owed by the public to keep the Social Security system afloat. C) the portion of government debt held by private individuals and firms. D) the excess of annual government spending over annual tax revenues.
A good or service or a resource is excludable if
A) it is possible to prevent someone from enjoying its benefits. B) it is not possible to prevent someone from enjoying its benefits. C) its use by one person decreases the quantity available for someone else. D) its use by one person does not decrease the quantity available for someone else.
Assuming no change in the nominal exchange rate, how will a decrease in the price level in the United States relative to France affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country.)
A) The real exchange rate will rise. B) The real exchange rate will be unaffected. C) The real exchange rate will fall. D) The impact on the real exchange rate cannot be predicted.
The exchange rate for a foreign currency that is determined by supply and demand is
A) a fixed exchange rate. B) a controlled exchange rate. C) a constrained exchange rate. D) a flexible exchange rate.