In a system of flexible exchange rates, expansionary monetary policy abroad would induce
a. a rise in the U.S. exchange rate.
b. a fall in the U.S. rate of exchange.
c. a balance of payments surplus for the United States.
d. no change in U.S. exchange rates.
A
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If banks face a problem in loan markets when bad credit risks are the ones most likely to seek bank loans, it is described as
A) moral hazard. B) moral suasion. C) adverse selection. D) fraud.
Which statement concerning the kinked demand curve model of oligopoly is false?
A. It addresses the question of price "stickiness." B. It assumes when one oligopoly raises the price, all others will follow. C. The portion of the demand curve above the "kink" is more elastic than the portion below. D. The firm's marginal costs can sometimes shift without changing the profit-maximizing price and output.