Which of the following is true about exchange rates?
•
They often change as a result of changing economic conditions in one country compared to another.
•
A country's exchange rate will depend on how much supply and
...
Which of the following is true about exchange rates?
•
They often change as a result of changing economic conditions in one country compared to another.
•
A country's exchange rate will depend on how much supply and demand exist for its currency.
•
Exchange rates matter when making international purchases or traveling abroad.
•
All of the above are true regarding exchange rates.
CONCEPT
Foreign Exchange and Currency
2
Select the statement below that is true of ONLY price ceilings.
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Are binding when they are above equilibrium
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Can create a shortage of product
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The market clears, there are no shortages or surpluses
•
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The market is allowing for trade to occur between buyers and sellers
CONCEPT
Binding & Non-Binding Constraints
3
Which statement below about expansionary fiscal policy is true?
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It generally has a negative effect on GDP.
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If it is based on a tax cut, it will trigger the multiplier effect.
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It could include lowering interest rates.
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It could include decreasing the reserve requirement.
CONCEPT
Expansionary Policy
4
If the reserve requirement for a bank is 25%, $15 in M0 will lead to which of the following amounts of money of M1?
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$45
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$4
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$15
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$60
CONCEPT
Reserve Requirement
5
Laura is willing to pay as much as $1,000 for a wedding dress but is happy to find one she likes that costs $300.
Select the term below that corresponds to this situation.
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Consumer surplus
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Equilibrium
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Ceteris paribus
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Producer surplus
CONCEPT
Consumer Surplus
6
Private loan seekers getting crowded out of the loan market by the government is a(n) __________.
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criticism of fiscal policy
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advantage of fiscal policy
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criticism of monetary policy
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advantage of monetary policy
CONCEPT
Pros and Cons of Monetary and Fiscal Policy
7
Which statement below about producer surplus is NOT true?
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When producer surplus drops to zero, firms stop producing.
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Producer surplus is basically the same a
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