If the United States experiences an economic boom, compared to other countries, how will this affect the value of the U.S. dollar?
A. It will fall because other nations would be forced to raise their interest rates.
B. It will fall because the United States will import more goods and services, leading to an increased supply of dollars.
C. It will rise because U.S. GDP would be rising faster than other countries.
D. It will rise because the Fed will have to lower U.S. interest rates.
Answer: B
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Suppose a perfectly competitive market is in long-run equilibrium and then there is a permanent increase in the demand for that product. The new long-run equilibrium will have
A) fewer firms in the market. B) more firms in the market. C) the same number of firms in the market. D) probably a different number of firms, but it is not possible to determine if there will be more or fewer firms. E) a permanent decrease in supply.
According to the classical system, saving is a function of
a. income. b. the real interest rate. c. the real wage. d. the profitability of firms. e. all of the above.