Refer to Figure 15-11. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, the Federal Reserve would most likely
A) decrease the inflation rate. B) decrease interest rates.
C) not change interest rates. D) increase interest rates.
B
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A business can be operated profitably at a loss for an indefinite period of time
A) if it is unable to meet all their obligations but able to cover operating costs. B) if we neglect the social costs of discriminatory pricing. C) for firms that enjoy special legal privileges. D) if costs are calculated as marginal opportunity costs.
Assume that the fixed exchange rate system of 100 pesos = 1 dollar is above the equilibrium exchange rate of 90 pesos= 1 dollar in a flexible exchange rate system. Then the dollar would be
a. undervalued and the peso would be overvalued. b. overvalued and the peso would be undervalued. c. revalued. d. depreciated and the peso would be appreciated.