When a currency is described as undervalued, this typically implies:
A. the exchange rate is lower than one year previous.
B. it is undervalued relative to what the describer believes purchasing power parity to be.
C. the exchange rate is greater than one.
D. it is undervalued relative to the exchange rate set by the nation's central bank.
Answer: B
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According to Walton and Rockoff, the primary reason for the demise of the canal system was
a. excessive reliance on individual entrepreneurs so that a system of canals was never created. b. excessive government regulation that kept canal rates and profits too low. c. environmental damage from deforestation that left canals flooded at some times and dry at others. d. competition from the railroads.
Complementary goods are goods:
a. that are consumed jointly. b. that are consumed one in place of the other. c. for which demand increases when the price of its complementary goods increases. d. for which demand decreases when the price of its complementary goods decreases. e. that are inversely related.
If, due to rising demand, the price of cotton rose 15 percent while the prices of other goods and services rose an average of 10 percent,
a. the relative price of cotton has risen and one would expect the output of cotton to rise as a result. b. the relative price of cotton has risen and one would expect the output of cotton to fall as a result. c. the relative price of cotton has fallen and one would expect the output of cotton to rise as a result. d. the relative price of cotton has fallen and one would expect the output of cotton to fall as a result.
What will be the effects of a decrease in government spending?
a. an increase in equilibrium GDP, a decrease in money demand, a decrease in the interest rate, and an increase in investment spending b. a decrease in equilibrium GDP, a decrease in money demand, an increase in the interest rate, and a decrease in investment spending c. an increase in equilibrium GDP, an increase in money demand, an increase in the interest rate, and an increase in investment spending d. a decrease in equilibrium GDP, a decrease in money demand, a decrease in the interest rate, and an increase in investment spending e. an increase in equilibrium GDP, an increase in money demand, an increase in the interest rate, and a decrease in investment spending