Determining the comparative advantage of a country requires that you look at the economic notion of
A. accounting and economic profit.
B. opportunity cost.
C. external costs.
D. ceteris paribus.
Answer: B
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Which of the following can help to explain why higher inflation may lead to currency appreciations?
A) The interest rate is not the prime target of monetary policy. B) Most central banks adjust their policy interest rates expressly so as to keep inflation in check. C) Central banks increase the money supply leading to overshooting of the exchange rate. D) Inflation will increase the purchasing power of a currency. E) The world market does not adjust their currency trade to reflect inflation.
The principal result of the rising value of the U.S. dollar in the mid-1990s was the
a. lower foreign inflation. b. lower U.S. interest rates. c. opportunities for currency speculation. d. attractive investments in U.S. technology.
______________ accounts for interrelationships among markets.
Fill in the blank(s) with the appropriate word(s).
The price elasticity of demand for food is
A. Perfectly inelastic. B. Perfectly elastic. C. Relatively inelastic. D. Relatively elastic.