Answer the following statements true (T) or false (F)
1. Under the gold standard, a nation experiencing chronic trade deficits had to increase its money supply while reducing its holdings of gold.
2. After World War II, most nations adopted some type of fixed or controlled exchange rate system.
3. Under a fixed or controlled exchange rate system, if the United States wanted to increase the value of the dollar, it could buy foreign currencies with dollars.
4. Since World War II, the importance of gold in international exchange has increased.
5. The Bretton Woods system included the idea of fixed exchange rates.
1. FALSE
2. TRUE
3. FALSE
4. FALSE
5. TRUE
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A housing shortage results when
A) a tax is imposed on housing. B) a rent ceiling below the equilibrium rent is imposed. C) a rent ceiling above the equilibrium rent is imposed. D) rents rise. E) a rent floor below the equilibrium rent is imposed.
Under earnings-sharing regulation, if a firm's profits ________ above a certain level, they must be shared with the firm's ________
A) rise; customers B) fall; customers C) rise; suppliers D) fall; suppliers E) rise; competitors
Refer to Figure 3-6. The figure above represents the market for coffee grinders. Assume that the price of coffee grinders is $50. At this price,
A) there is a surplus equal to 90 coffee grinders that will be eliminated when the price falls to $25. B) the supply exceeds the demand by 90. Some producers will have an incentive to offer to sell coffee grinders at a lower price. C) there is a surplus equal to 90 coffee grinders and the price of coffee grinders will fall until demand is equal to supply. D) the quantity supplied exceeds the quantity supplied by 100. The price will eventually fall to $25 where quantity demanded will equal quantity supplied.
The substitution bias in the consumer price index refers to the idea that consumers ________ the quantity of products they buy in response to price, and the CPI does not reflect this and ________ the cost of the market basket
A) change; underestimates B) do not change; overestimates C) change; overestimates D) do not change; underestimates