A nominal anchor is a commitment to keep nominal variables within limits, often tied to an external value or price. When nations do not incorporate such discipline into their monetary policy, exchange rates are often:
a. irrelevant to economic activity.
b. extremely volatile, because traders consider monetary shocks to be permanent.
c. less dependent on monetary variables.
d. determined by political considerations rather than economic fundamentals.
Answer: b. extremely volatile, because traders consider monetary shocks to be permanent.
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Suppose that for each firm in the competitive market for potatoes, long-run average cost is minimized at $0.20 per pound when 500 pounds are grown. The demand for potatoes is Q = 10,000/p
If the long-run supply curve is horizontal, then how much will consumers spend, in total, on potatoes? A) $0 B) $500 C) $10,000 D) $50,000
The additional output produced by adding one more unit of an input is the:
A. marginal product. B. average product. C. total production. D. slope of the marginal product curve.