A stronger U.S. dollar in world exchange markets means that
A) foreigners sell the dollars that they have.
B) a dollar buys more units of foreign currency than it could before.
C) a dollar buys less units of foreign currency than it could before.
D) a dollar buys the same amount of foreign currency than it could before, with gold backing up the value of the dollar.
B
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Assume an automobile manufacturer can sell its sport utility vehicle (SUV) with or without a trailer towing package. One group of customers, group A, is willing to pay a maximum of $30,000 for the SUV and $1,100 for the towing package
A second group, B, is willing to pay $29,000 for the SUV and $1,000 for the towing package. Assuming the manufacturer cannot price discriminate, to maximize its revenues the manufacturer should: A) sell the components separately, charging $30,000 for the SUV and $1,000 for the towing package. B) sell the components separately, charging $29,000 for the SUV and $1,100 for the towing package. C) sell the components separately, charging $29,000 for the SUV and $1,000 for the towing package. D) sell the components as a bundle for $30,500.
The best explanation of why the aggregate demand curve has a negative slope is that
A) at a higher price level households cut back on their spending on goods and services. B) at a higher price level business firms wish to produce more goods and services. C) a higher price level results in lower real balances and a higher real interest rate. D) a higher price level results in less government spending on transfers, such as unemployment insurance and social security payments.