Macro Test 3

In order to avoid the imposition of other types of trade barriers, foreign producers will sometimes agree to limit their exports to a country. What are these types of agreements called? involuntary export restraints voluntary export restraints sanctions implicit quotas

voluntary export restraints

Whenever a buyer and a seller agree to trade, both must believe they will be made better off unless one party is richer than the other. whether the buyer and seller live in the same (or different) city or country. only if the buyer and seller live in countries with market economies. unless the buyer resides in a different country than the seller. International trade may make the buyer or seller worse off.

whether the buyer and seller live in the same (or different) city or country

Consider the following data for a closed economy: Y = $12 trillion C = $8 trillion I = $2 trillion G = $2 trillion TR = $2 trillion T = $3 trillion Refer to Scenario 10-1. Based on the information above, what is the level of private saving in the economy?

$3 trillion

E S-5 B-3 M S-2 B-2 Refer to Table 7-6. What is the opportunity cost to produce 1 sword in Morocco? 1 belt 2 belts 1/2 of a belt 1.5 belts

1 belt

E S-5 B-3 M S-2 B-2 Estonia and Morocco can produce both swords and belts. Each country has a total of 40 available labor hours for the production of swords and belts. Table 7-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 7-6. What is the opportunity cost to produce 1 belt in Morocco? 2 swords 1/2 of a sword 1 sword 1.5 swords

1 sword

E S-5 B-3 M S-2 B-2 Estonia and Morocco can produce both swords and belts. Each country has a total of 40 available labor hours for the production of swords and belts. Table 7-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 7-6. What is the opportunity cost to produce 1 belt in Estonia? 1/3 of a sword 3/5 of a sword 5 swords 1.67 swords

1.67 swords

You're traveling in Ireland and are thinking about buying a new digital camera. You've decided you'd be willing to pay $125 for a new camera, but cameras in Ireland are all priced in euros. If the exchange rate is 0.85 euros per dollar, what's the highest price in euros you'd be willing to pay for a camera? 110.15 euros 147 euros 106.25 euros 105 euros

106.25 euros

You're traveling in Japan and are thinking about buying a new kimono. You've decided you'd be willing to pay $175 for a new kimono, but kimonos in Japan are all priced in yen. If the exchange rate is 89 yen per dollar, what is the highest price in yen you'd be willing to pay for a kimono? (Assume no taxes or duties are associated with the purchase.) 15,575 yen 19,425 yen 1.97 yen 330.75 yen

15,575 yen

Estonia 100 40​ w/Trade 200 0 ​​Morocco 60 60 w/Trade 0 120 Refer to Table 7-6. With trade, what is the total gain in belt production? 20 40 120 60

20

E S-5 B-3 M S-2 B-2 Refer to Table 7-6. What is the opportunity cost to produce 1 sword in Estonia? 3 belts 3/5 of a belt 1/3 of a belt 1.67 belts

3/5 of a belt

Estonia 100 40​ w/Trade 200 0 ​​Morocco 60 60 w/Trade 0 120 Refer to Table 7-6. With trade, what is the total gain in sword production? 100 60 200 40

40

Estonia 100 40​ w/Trade 200 0 ​​Morocco 60 60 w/Trade 0 120 Refer to Table 7-6. If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many belts will Estonia consume? 90 120 70 50

50

Estonia 100 40​ w/Trade 200 0 ​​Morocco 60 60 w/Trade 0 120 Refer to Table 7-6. If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many belts will Morocco consume? 70 120 90 60

70

Comparative advantage

Ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors

Absolute advantage

Ability of an individual, a firm, or a country to produce more of a good or service than competitors, using the same amount of resources

Risk sharing

Allowing investors to spread their money over many different assets, investors can reduce their risk while maintaining a high expected return on their investment

How does an increase in a country's exchange rate affect its trade balance? An increase in the exchange rate raises imports, reduces exports, and reduces the trade balance. An increase in the exchange rate reduces imports, raises exports, and reduces the trade balance. An increase in the exchange rate raises imports, reduces exports, and increases the trade balance. An increase in the exchange rate reduces imports, raises exports, and increases the trade balance.

An increase in the exchange rate raises imports, reduces exports, and reduces the trade balance.

How were countries whose industries competed with Chinese industry affected by a yuan that was pegged to the dollar? Because China's population is so large relative to other countries, the pegged exchange rate made the goods of foreign competing firms much less expensive than domestic Chinese goods. Competitors feared that the declining value of the dollar would continue to make Chinese goods more expensive. Because the yuan was overvalued at the pegged exchange rate, competing firms from other countries feared that abandoning the peg would lead to an increase in Chinese exports. Because the yuan was undervalued at the pegged exchange rate, the level of Chinese exports remained higher than they would have been if the exchange rate was allowed to float freely.

Because the yuan was undervalued at the pegged exchange rate, the level of Chinese exports remained higher than they would have been if the exchange rate was allowed to float freely.

Rob B 20 F 80 Bill B 30 F 60 Rob has a comparative advantage in catching fish and picking berries. Bill has a comparative advantage in picking berries. Bill has a comparative advantage in catching fish. Rob has a comparative advantage in picking berries.

Bill has a comparative advantage in picking berries

Rob B 20 F 80 Bill B 30 F 60 Rob has an absolute advantage in picking berries and catching fish. Rob has an absolute advantage in picking berries and Bill has an absolute advantage in catching fish. Bill has an absolute advantage in picking berries and Rob has an absolute advantage in catching fish. Bill has an absolute advantage in picking berries and catching fish.

Bill has an absolute advantage in picking berries and Rob has an absolute advantage in catching fish

When the market value of the dollar rises relative to other currencies around the world, we say that the supply of dollars has increased. the dollar has appreciated. the dollar has depreciated. the demand for dollars has increased.

the dollar has appreciated

If the exchange rate changes from $1.45 = 1 euro to $1.37 = 1 euro, then both the euro and dollar have depreciated. the euro has depreciated and the dollar has appreciated. the euro has appreciated and the dollar has depreciated. both the euro and dollar have appreciated.

the euro has depreciated and the dollar has appreciated

Where does comparative advantage come from?

Climate and natural resources, relative abundance of labor and/or capital, technological differences, external economies

Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports. Which of the following counter-arguments is made by economists who oppose trade restrictions? Trade restrictions have a limited impact because most Americans prefer domestic goods over imports. Trade restrictions benefit consumers in the short run but not in the long run. Statistics show that trade restrictions actually do not save jobs. Consumers pay a high cost for jobs saved through trade restrictions.

Consumers pay a high cost for jobs saved through trade restrictions

The response of investment spending to an increase in the government budget deficit is called expansionary investment income minus net taxes private dissaving crowding out

Crowding out

Currency traders expect the value of the dollar to fall. What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market? Demand for dollars will decrease, and supply of dollars will decrease. Demand for dollars will increase, and supply of dollars will decrease. Demand for dollars will decrease, and supply of dollars will increase. Demand for dollars will increase, and supply of dollars will increase.

Demand for dollars will decrease, and supply of dollars will increase

Under the Bretton Woods exchange rate system, set up in 1944, which of the following was true? Americans could sell their dollars to foreign central banks in exchange for gold. Foreign central banks could sell their dollars to the American government in exchange for gold. Americans could sell their dollars to the American government in exchange for gold. Americans could sell their dollars to the American government in exchange for silver.

Foreign central banks could sell their dollars to the American government in exchange for gold.

Refer to Figure 18-2. Which of the events below cause the shifts in the supply and demand curves in the market for dollars against the British pound shown in the graph above? Graph supply increases and demand decreases. Real income rises in the United States. Interest rates rise in England. Interest rates rise in the United States. Real income falls in England.

Interest rates rise in England.

Suppose an economy's exchange rate system is the gold standard and vast tracks of gold are discovered, as is what happened in the United States in 1849. If the economy is at full employment, what should this discovery do? It should raise the money supply and cause inflation. It should raise the money supply but have no impact on the price level. It should raise the money supply and cause disinflation. It should lower the money supply and cause deflation.

It should raise the money supply and cause inflation.

Voluntary export restraints (VERs)

Negotiated between countries, numerical limits

Demand decrease... consistent with The government runs a budget surplus. New government regulations decrease the profitability of new investment. An expected expansion increases the profitability of new investment. Investment spending is declining due to crowding out.

New government regulations decrease the profitability of new investment

Quotas

Numerical limits imposed - By one country

Information

Prices of financial securities represent the beliefs of other investors and financial intermediaries about the future revenue stream from holding those securities

Rob B 20 F 80 Bill B 30 F 60 Bill has an absolute advantage in catching fish. Rob has a comparative advantage in picking berries and catching fish. Bill has a comparative advantage in catching fish. Rob has a comparative advantage in catching fish.

Rob has a comparative advantage in catching fish

Rob B 20 F 80 Bill B 30 F 60 Bill's opportunity cost for picking berries and catching fish are both greater than Rob's. Bill has a greater opportunity cost than Rob for picking berries. Bill's opportunity cost for catching fish is less than Rob's. Rob has a greater opportunity cost than Bill for picking berries.

Rob has a greater opportunity cost than Bill for picking berries

If stricter immigration laws are imposed and many foreign workers in the United States are forced to go back to their home countries the long-run aggregate supply curve will shift to the left. the long-run aggregate supply curve will shift to the right. we will move up along the long-run aggregate supply curve. we will move down along the long-run aggregate supply curve.

the long-run aggregate supply curve will shift to the left.

If technological change occurs in the economy we will move up along the long-run aggregate supply curve. the long-run aggregate supply curve will shift to the right. the long-run aggregate supply curve will shift to the left. we will move down along the long-run aggregate supply curve.

the long-run aggregate supply curve will shift to the right.

Economist Steve Landsburg has pointed out that Ebenezer Scrooge's change in behavior from miser to spender might actually be detrimental to the economy because Scrooge's consumption habits were more detrimental to the environment than were his earlier saving habits. Scrooge was happiest when he was saving money, and happiness is the key to economic growth. Scrooge's miserly saving helped contribute to the production of investment goods rather than consumption goods. saving has to be greater than consumption for the economy to grow.

Scrooge's miserly saving helped contribute to the production of investment goods rather than consumption goods.

Which of the following countries is not one of the top three exporting countries in the world? South Korea US China Germany

South Korea

If Sweden exports cell phones to Denmark and Denmark exports butter to Sweden, which of the following would explain this pattern of trade? The opportunity cost of producing butter in Denmark is higher than the opportunity cost of producing butter in Sweden. Sweden has a lower opportunity cost of producing cell phones than Denmark and Denmark has a comparative advantage in producing butter. Sweden must have an absolute advantage in producing cell phones and Denmark must have an absolute advantage in producing butter. Sweden has a higher opportunity cost of producing cell phones than Denmark, and Denmark has a higher opportunity cost of producing butter.

Sweden has a lower opportunity cost of producing cell phones than Denmark and Denmark has a comparative advantage in producing butter

Savings public equation

T - G - TR

There is a government budget surplus if T - TR > G. G > TR. G > T. TR < T.

T - TR > G.

How do lower taxes affect aggregate demand? They increase corporate investment and aggregate demand. They increase disposable income, consumption, and aggregate demand. They increase aggregate supply and thus increase aggregate demand as well. They reduce disposable income, consumption, and aggregate demand.

They increase disposable income, consumption, and aggregate demand.

Spending on the war in Afghanistan is essentially categorized as government purchases. How do increases in spending on the war in Afghanistan affect the aggregate demand curve? They will move the economy down along a stationary aggregate demand curve. They will move the economy up along a stationary aggregate demand curve. They will shift the aggregate demand curve to the right. They will shift the aggregate demand curve to the left.

They will shift the aggregate demand curve to the right.

In a closed economy, private saving is equal to which of the following? Y + TR - C - T Y - G - T Y - G - T + TR Y - C - T

Y + TR - C - T

Savings private equation

Y + TR - C - T

Which of the following is the best example of a tariff? a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers a limit on the quantity of residential air conditioners that can be imported from a foreign country a $150 fee imposed on all imported residential air conditioners

a $150 fee imposed on all imported residential air conditioners

When Sophie, a French citizen, purchases a Dell computer in Paris, France that was produced in Texas, the purchase is both a US and a French export a US import and a French export a US export and a French import neither an export nor an import for either country

a US export and a French import

An increase in the value of which of the following would not increase household wealth? the balance in your savings account. the equity in one's home. 500 shares of Google stock. a credit card balance.

a credit card balance.

Which of the following will not shift the demand for the euro to the right? an increase in incomes in countries that buy goods from the European Union an increase in interest rates in the European Union expectations among speculators that the price of the euro will rise in the future a decrease in the demand for European goods

a decrease in the demand for European goods

Because of the slope of the aggregate demand curve, we can say that a decrease in the price level leads to a higher level of real GDP demanded. an increase in the price level leads to no change in the level of real GDP demanded. a decrease in the price level leads to a lower level of real GDP demanded. an increase in the price level leads to a higher level of real GDP demanded.

a decrease in the price level leads to a higher level of real GDP demanded.

Financial security

a document (sometimes electronic) stating the terms under which funds pass from the buyer of the security to the seller

Which of the following is the most liquid? a corporate bond a government bill a dollar bill a mutual fund share

a dollar bill

Bond

a financial security promising to repay a fixed amount of funds - loan from household to a firm

Stock

a financial security representing partial ownership of a firm

The gold standard is an example of a managed float exchange rate system. a flexible exchange rate system. a fixed exchange rate system. a floating exchange rate system.

a fixed exchange rate system

China has developed a comparative advantage in the production of children's toys. The source of this comparative advantage is a large supply of unskilled workers and relatively little capital. investment in capital used to produce toys. superior process technology. a large supply of natural resources.

a large supply of unskilled workers and relatively little capital

Which of the following is the best example of a quota? a limit on the quantity of residential air conditioners that can be imported from a foreign country a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment a $150 fee imposed on all imported residential air conditioners

a limit on the quantity of residential air conditioners that can be imported from a foreign country

Governments sometimes erect barriers to trade other than tariffs and quotas. Which of the following is not an example of this type of trade barrier? a requirement that imports meet health and safety requirements restrictions on imports for national security reasons a requirement that the employees of domestic firms that engage in foreign trade pay income taxes a requirement that the U.S. government buy military uniforms only from U.S. manufacturers

a requirement that the employees of domestic firms that engage in foreign trade pay income taxes

If consumers decide to be more frugal and save more out of their income, then this will cause a shift in the supply curve for loanable funds to the right. a shift in the supply curve for loanable funds to the left. a movement to the right along the supply curve for loanable funds. a movement to the left along the supply curve for loanable funds.

a shift in the supply curve for loanable funds to the right.

All of the following are sources of comparative advantage except technology. relative abundance of labor and capital. climate and natural resources. a strong foreign currency exchange rate.

a strong foreign currency exchange rate

Destabilizing speculation refers to actions taken by the International Monetary Fund that increase lending to countries who have pegged their currencies against the dollar. actions taken by investors who sell a country's currency in anticipation of buying it back later at a lower price. actions taken by currency traders to sell a currency that is undervalued. any depreciation of a country's currency as a result of long-run adjustments to purchasing power parity.

actions taken by investors who sell a country's currency in anticipation of buying it back later at a lower price.

Which of the following would encourage economic growth through increases in the capital stock? increase in household saving decrease in the government deficit increase in the profitability of new investment due to technological change all of the above

all of the above

An increase in the demand for loanable funds will occur if there is an increase in expected profits from firm investment projects an increase in the nominal interest rate accompanied by an equal increase in inflation a decrease in the real interest rate an increase in the real interest rate

an increase in expected profits from firm investment projects

Which of the following would cause the short-run aggregate supply curve to shift to the left? a decrease in interest rates an increase in the price level a technological advance an increase in inflation expectations

an increase in inflation expectations

Which of the following will shift the aggregate demand curve to the right, ceteris paribus? a decrease in disposable income an increase in interest rates a decrease in expected profits for firms an increase in net exports

an increase in net exports

Which of the following would cause the dollar to appreciate? an increase in the demand for imports from foreign countries an increase in the demand for dollars a decrease in the demand for dollars an increase in the supply of dollars

an increase in the demand for dollars

Supply decrease to the left... is consistent with an increase in household income an increase in transfer payments to households an increase in the proportion of income after net taxes used for consumption an increase in tax revenues collected by the government

an increase in the proportion of income after net taxes used for consumption

If the value of the U.S. dollar declined relative to the currencies of most of its major trading partners in the second half of 2021, this fall in the price of the dollar against the other currencies was ________ for companies that exported to the United States and ________ for U.S. companies that exported to other countries. bad; good good; bad good; good bad; bad

bad;good

If a country sets a pegged exchange rate that is below the equilibrium exchange rate, how can the country maintain the peg? by decreasing the pegged exchange rate by purchasing surplus domestic currency at the pegged rate by selling surplus domestic currency at the pegged rate by purchasing surplus domestic currency at the equilibrium exchange rate

by selling surplus domestic currency at the pegged rate

The level of aggregate supply in the long run is not affected by changes in the number of workers. changes in the price level. changes in technology. changes in the capital stock.

changes in the price level.

Higher personal income taxes decrease aggregate demand. increase disposable income. increase aggregate demand. both B and C

decrease aggregate demand.

An increase in the price level results in a(n) ________ in the quantity of real GDP demanded because ________. decrease; a higher price level reduces consumption, investment, and net exports increase; a higher price level reduces consumption, investment, and net exports decrease; a higher price level increases consumption, investment, and net exports increase; a higher price level increases consumption, investment, and net exports

decrease; a higher price level reduces consumption, investment, and net exports

Which of the following will not occur as the result of a decrease in net taxes? shift to the left of the supply curve for loanable funds all of the above decreased government saving decreased household saving

decreased household saving

Assuming the United States is the "domestic" country, if the real exchange rate between the United States and France increases from 1.5 to 1.8 the prices of U.S. goods and services have decreased by 16% relative to France. the prices of U.S. goods and services have increased by 3% relative to France. the prices of U.S. goods and services have increased by 20% relative to France. the prices of U.S. goods and services have increased by 53% relative to France.

the prices of U.S. goods and services have increased by 20% relative to France

An increase in public saving has what impact on the market for loanable funds? supply of loanable funds decreases demand for loanable funds decrease demand for loanable funds increases supply of loanable funds increase

demand for loanable funds increase

Autarky is a situation in which a country has no absolute advantage in any production only imports products does not trade with other countries only exports products

does not trade with other countries

As percentage of imports, the largest product category of U.S. imports from China is electronic products. machinery and transportation equipment. textiles, apparel, and footwear. chemicals, minerals, and metals.

electronic products

The currency adopted by most countries in Western Europe is referred to as the Eurodollar. euro. pound. yen.

euro

Liquidity

financial system allows savers to quickly convert their investments into cash

Financial intermediaries

firms, such as banks, mutual funds, pension funds, and insurance companies, that borrow funds from savers and lend them to borrowers.

International trade helps consumers but harms exporting firms and their workers. helps consumers but hurts firms that are less efficient than their foreign competitors. harms consumers but helps exporting firms. helps consumers and firms that compete with their foreign competitors.

helps consumers but hurts firms that are less efficient than their foreign competitors

When the price level in the United States falls relative to the price level of other countries, ________ will fall, ________ will rise, and ________ will rise. net exports; imports; exports net exports; exports; imports exports; imports; net exports imports; exports; net exports

imports; exports; net exports

Lower personal income taxes decrease aggregate demand. increase transfer payments. decrease disposable income. increase aggregate demand.

increase aggregate demand.

Which of the following will increase investment spending in the economy, holding everything else constant? increase in consumer dissavings increase in the budget deficit increase in the federal government surplus increase in transfer payments

increase in the federal government surplus

Over the past several decades there has been rapid growth in international trade. This growth has been due to all but one of the following factors. Which factor has not contributed to the growth of international trade? favorable changes in government policies reduction in shipping costs spread of reliable communications increase in the tariffs changed on many goods

increase in the tariffs charged on many goods

Ceteris paribus, a rise in interest rates in the United States will cause the yen price of the dollar in international exchange markets to ________; i.e., the dollar ________ in value against the yen. decrease; depreciates increase; depreciates decrease; appreciates increase; appreciates

increase;appreciates

When the government runs a budget deficit, we would expect to see that investment will fall public saving is positive G + TR < T private saving will fall

investment will fall

Members of Congress promising to support each other's legislation is known as logrolling. protectionism. explicit collusion. implicit collusion.

logrolling

The demand for loanable funds is downward sloping because the ________ the interest rate, the ________ the number of profitable investment projects a firm can undertake, and the ________ the quantity demanded of loanable funds. greater; greater; greater greater; smaller; greater lower; greater; greater lower; smaller; greater

lower; greater; greater

The current exchange rate system in the United States is best described as a silver standard. gold standard. fixed exchange rate system. managed float exchange rate system.

managed float exchange rate system

Financial markets

markets where financial securities, such as stocks and bonds, are bought and sold

When the value of a currency is determined ________, the exchange rate system is defined as a floating exchange rate system. by its issuing government only by supply and demand by its issuing government, with occasional readjustments in value mostly by supply and demand, but with occasional government intervention

mostly by supply and demand, but with occasional government intervention

Consider the following data for a closed economy: Y = $12 trillion C = $8 trillion I = $2 trillion G = $2 trillion TR = $2 trillion T = $3 trillion Refer to Scenario 10-1. Based on the information above, what is the level of public saving?

negative $1 trillion (a deficit of $1 trillion)

The short-run aggregate supply curve has a(n) ________ slope because as prices of ________ rise, prices of ________ rise more slowly. positive; inputs; final goods and services positive; final goods and services; inputs infinite; inputs; final goods and services infinite; final goods and services; inputs

positive; final goods and services; inputs

A financial intermediary's main function is to match ___ with excess funds to ___ with a shortage of funds borrowers;savers governements;households savers;borrowers firms;insurance companies

savers;borrower

In 2005, Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas, gasoline, and heating oil prices. Three years later, once the refining capacity was restored, these prices came back down. The restoration of refining capacity should shift the short-run aggregate supply curve to the right. shift the short-run aggregate supply curve to the left. move the economy down along a stationary short-run aggregate supply curve. move the economy up along a stationary short-run aggregate supply curve.

shift the short-run aggregate supply curve to the right.

Textbook examples of trade between two nations are simplified in order to show how two nations both benefit from trade. These examples are misleading because trade restrictions are likely to be imposed as trade grows over time. they do not account for the reduction in wages that occurs in both countries as a result of trade. in the real world, rich countries can take advantage of poor countries. some individuals in both countries may be made worse off because of trade.

some individuals in both countries may be made worse off because of trade.

One difference between stocks and bonds is that stocks are usually issued in electronic form, while bonds are usually issued in paper form stocks represent ownership in companies, while bonds represent ownership in banks stocks do not involve a promise to repay a purchaser of the stock, while bonds represent a promise to repay the purchase price of the bond stocks are financial securities, while bonds are labor market securities

stocks do not involve a promise to repay a purchaser of the stock, while bonds represent a promise to repay the purchase price of the bond

The loanable funds market is given in the figure above, (equilibrium at 4). If the current real interest rate is 5 percent, which of the following is true? surplus of loanable funds in the market shortage of loanable funds in the market loanable funds market is in equilibrium quantity of loanable funds being demanded in the market is less than $90 million

surplus of loanable funds in the market

Tariffs

taxes imposed by government

The United States has developed a comparative advantage in digital computers, airliners, and many prescription drugs. The source of its comparative advantage in these products is a favorable climate. technology. a strong central government. abundant supplies of natural resources.

technology

Workers and firms both expect that prices will be 2.5% higher next year than they are this year. As a result the purchasing power of wages will rise if wages increase by 2.5%. the short-run aggregate supply curve will shift to the left as wages increase. aggregate demand will increase by 2.5%. workers will be willing to take lower wages next year, but not lower than a 2.5 percent decrease.

the short-run aggregate supply curve will shift to the left as wages increase.

When Americans increase their demand for Japanese goods the supply of dollars will rise, and the demand for yen will rise. the demand for dollars will fall, and the demand for yen will rise. the supply of dollars will fall, and the demand for yen will fall. the demand for dollars will rise, and the demand for yen will rise.

the supply of dollars will rise, and the demand for yen will rise

Financial system

the system of financial markets and financial intermediaries through which firms acquire funds from households

A currency pegged at a value below the market equilibrium exchange rate is overvalued. achieving purchasing power parity. None of the above are correct. undervalued.

undervalued

China began pegging its currency, the yuan, to the dollar in 1994. Because the yuan was ________ at the pegged exchange rate, the Chinese government increased its reserves of ________ as the government purchased more ________ to maintain the pegged exchange rate. overvalued; dollars; dollars undervalued; yuan; yuan overvalued; yuan; yuan undervalued; dollars; dollars

undervalued; dollars; dollars

China began pegging its currency, the yuan, to the dollar in 1994. Because the yuan has been ________ at the pegged exchange rate, the Chinese government ________ its reserves of dollars as the government purchased more ________ to maintain the pegged exchange rate. overvalued; increased; yuan overvalued; decreased; yuan undervalued; increased; dollars undervalued; decreased; yuan

undervalued; increased; dollars

All of the following are reasons why the wages of workers and the prices of inputs rise more slowly than the prices of final goods and services except firms are often slow to adjust wages. contracts make prices and wages sticky. menu costs make some prices sticky. unions are successful in pushing up wages.

unions are successful in pushing up wages.

When the economy enters into a recession, your employer is ________ to reduce your wages because ________. likely; aggregate demand is vertical in the long run likely; output prices always fall during recession unlikely; lower wages reduce productivity and morale unlikely; output and input prices generally fall during recession

unlikely; lower wages reduce productivity and morale