Suppose that a chair in Germany sells for 100 euros. The exchange rate changes from $1 = 1 euro to $1 = 4 euros. How does this change affect the equivalent U.S. dollar price of the chair?
a. The price decreases from $100 to $25.
b. The price increases from $100 to $400.
c. The price decreases from $400 to $100.
d. The price increases from $25 to $400
a. The price decreases from $100 to $25.
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Suppose that Country A has an absolute advantage over country B in the production of both wheat and cloth. The opportunity cost of 1 unit of wheat is 2 units of cloth in Country A and 3 units of cloth in Country B. If each country specializes in producing the good in which it is relatively more efficient and then trades for the other good, it follows that
a. all the resulting gains in consumption will go to Country A. b. all the resulting gains in consumption will go to Country B. c. each country will experience half the resulting gains in consumption. d. the allocation of the resulting consumption gains will be determined by bargaining between the two countries.
An effective rent control will
A) lead to a surplus of housing units. B) keep rents below the competitive market level. C) keep rents above the competitive market level. D) be set at the price where quantity supplied equals quantity demanded.
The government’s profit from printing currency is called
a) seignorage b) arbitrage c) the rate of exploitation d) the inflation tax e) the velocity of money
Which of the following examples would most likely happen when interest rates are low?
a. Lily invests $20,000 in municipal bonds. b. Millie keeps a larger balance in her no-interest checking account. c. Finlay decides it is a bad time to purchase a car. d. Logan increases his deposits in an interest-earning savings account.