Depreciation refers to a decrease in the value of a durable good caused by:
a. an increase in the price level.
b. changes in the interest rate

If, at the current exchange rate between the dollar and the South African rand of 6.92 rand per dollar, the rand is "undervalued," how do you expect demand and supply in the foreign exchange markets to respond?

A) The supply of the dollar will rise, while the demand for the rand will fall. B) The supply of the dollar will rise, while the demand for the rand will rise. C) The demand for the dollar will rise, while the supply of the rand will fall. D) The demand for the dollar will fall, while the supply of the rand will rise.

Refer to Figure 5-4. Why is there a deadweight loss?

A) because the marginal social cost of producing each additional unit in excess of Q2 exceeds the marginal benefit B) because the marginal social benefit of producing each additional unit in excess of Q2 exceeds the private cost C) because the marginal private cost of producing each additional unit in excess of Q2 exceeds the marginal benefit D) because the marginal private benefit of producing each additional unit in excess of Q2 exceeds the social cost