All else being equal, if Asian restaurants switch from serving French champagne to serving California wines, then the market equilibrium value of the exchange rate for the U.S. dollar will:
A. either rise or fall depending on whether the supply or demand for dollars changes more.
B. become fixed.
C. rise.
D. fall.
Answer: C
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A benefit that accrues without compensation to someone other than the person who caused it is called:
A. an external benefit. B. a social benefit. C. a private benefit. D. a network benefit.
Suppose the government of South Island fixes the exchange rate of its currency, the Islandia, in terms of the U.S. dollar. Initially the exchange rate is set at $1 per Islandia. In a crisis, the government changes the exchange rate to $0.50 per Islandia. This is an example of a(n):
A. revaluation. B. devaluation. C. appreciation. D. depreciation.
Which of the following is a factor of production that generally is fixed in the short run?
A) raw materials B) labor C) a factory building D) water
Refer to the information provided in Figure 26.5 below to answer the question(s) that follow.
Figure 26.5Refer to Figure 26.5. As a result of an increase in government spending, the equilibrium interest rate ________ and the equilibrium output level ________.
A. increases; increases B. increases; decreases C. decreases; decreases D. decreases; increases