With flexible exchange rates
A. The balance of trade is zero.
B. All countries will run either a trade surplus or trade deficit.
C. The equilibrium exchange rate is determined in a foreign exchange market.
D. Foreign exchange reserves are used to offset balance-of-payment deficits.
Answer: C
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The existence of the tradeoff along the PPF means that the PPF is
A) bowed outward. B) linear. C) negatively sloped. D) positively sloped.
After Hurricane Katrina devastated parts of Mississippi and New Orleans in 2005, we can be sure that the production possibilities frontier for that area temporarily
A) shifted inward, toward the origin. B) shifted outward, away from the origin. C) became flatter. D) became steeper.
Effective methods of dealing with externalities would include
a. taxing firms that generate beneficial externalities. b. imposing fines equal to the difference between MSC and MPC on firms that generate beneficial externalities. c. giving a subsidy per unit equal to the difference between MSC and MPC to firms that generate beneficial externalities. d. restricting the output of firms that generate beneficial externalities.
For the recession of 2007-2009, it took ________ for employment to return to its cyclical peak
A) about 18 months B) about 2.5 years C) about 3.5 years D) more than 6 years