The gold standard is
A. one way of achieving a fixed exchange rate system.
B. the only way of achieving a floating exchange rate system.
C. the only way to achieve a fixed exchange rate system.
D. one way of achieving a floating exchange rate system.
Answer: A
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If a 20 percent increase in the price of a used car results in a 10 percent decrease in the quantity of used cars demanded, then the demand for used cars is
A) elastic. B) inelastic. C) unit elastic. D) arc elastic.
When a monopolist sells two units of output its total revenue is $600. When a monopolist sells three units of output its total revenue is $690. In order to sell three units of output instead of only two, the monopolist must
A. make no change in price and increase output by one unit. B. decrease its price by $70 per unit. C. decrease its price by $30 per unit. D. decrease its price by $90 per unit.
The exchange rate for the Mexican peso changes from $1 = 5 pesos to $1 = 6 pesos. This change will lead to ________.
A. Mexican goods becoming more expensive for Americans B. U.S. goods becoming less expensive for Mexicans C. an increase in Mexican imports from the U.S D. a decrease in U.S. exports to Mexico
Sometimes the government deals with externalities by creating laws to regulate behavior instead of using taxes to correct the market failure. So, requiring auto manufacturers to install a device called a catalytic converter which removes some toxins from exhaust may be preferable to a gas tax that reduces driving levels. This route is often preferred because:
a. c and e. b. it requires less technological development. c. it doesn't penalize drivers of clean cars. d. only car drivers pay for the externality. e. the cost of the externality is unknown.