In the market for euros, an increase in the relative safety of U.S. investments tends to
A. cause no change in equilibrium price.
B. increase equilibrium price.
C. decrease equilibrium price.
D. increase excess demand.
Answer: C
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The account that tracks the flow of assets like bank deposits, stocks, and bonds is the ________ account.
A. reserve B. current C. financial D. capital
A Starbucks Grande Latte costs $3.75 in the U.S. and 28 yuan in China. The nominal exchange rate is 6.75 yuan per dollar. The real exchange rate is
a. 1.106 . If purchasing-power parity held the nominal exchange rate would be higher. b. 1.106 . If purchasing-power parity held the nominal exchange rate would be lower. c. .904 . If purchasing power parity held the nominal exchange rate would be higher. d. .904 . If purchasing-power parity held the nominal exchange rate would be lower.
Suppose a perfectly competitive firm and a monopolist are both charging $5 for their respective products. From this, one can infer that:
A. the competitive firm is charging too much, and the monopolist is charging too little. B. the marginal benefit from selling an additional unit of output is less than $5 for both firms. C. the marginal benefit from selling an additional unit of output is $5 for the competitive firm and less than $5 for the monopolist. D. the marginal benefit from selling an additional unit of output is $5 for both firms.
Are there ever exceptions to the law of demand?
What will be an ideal response?