The study of exchange rate determination is a relatively new part of international economics, since
A) for much of the past century, exchange rates were fixed by government action.
B) the calculations required for this were not possible before modern computers became available.
C) economic theory developed by David Hume demonstrated that real exchange rates remain fixed over time.
D) dynamic overshooting asset pricing models are a recent theoretical development.
E) the exchange rate never fluctuates.
A
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When a unit tax of $2 is levied on a product
A) the entire $2 is paid by the consumer. B) the entire $2 is paid by the producer. C) both the consumer and producer pay $2 each. D) the consumer pays part of the $2 and the producer pays the rest.
What happens as the result of a shortage?
A) There is downward pressure on prices. B) There is upward pressure on prices. C) Consumers begin to view the good as an inferior good because they have a hard time finding it. D) Supply of the good decreases.
If the Fed wanted to shift to a more restrictive monetary policy, it would
a. expand the reserves available to the banking system, which would drive down short term interest rates. b. reduce the reserves available to the banking system, which would drive down short term interest rates. c. expand the reserves available to the banking system, which would drive up short term interest rates. d. reduce the reserves available to the banking system, which would drive up short term interest rates.
At Rick’s Trailer Trove, Rick’s buddy Theodore convinces him to extend production of trailers beyond the current production level in order to gain more producer surplus. This strategy will work if ______.
a. current production exceeds the equilibrium point b. current production is at the equilibrium point c. the cost of the additional output exceeds what the buyers will pay for it d. the cost of the additional output is less than what the buyers will pay for it