When in 1985 a British pound cost approximately $1.30, a Shetland sweater that cost 100 British pounds would have cost $130. With a weaker dollar, the same Shetland sweater would have cost
A) less than $130.
B) more than $130.
C) $130, since the exchange rate does not affect the prices that American consumers pay for foreign goods.
D) $130, since the demand for Shetland sweaters will decrease to prevent an increase in price due to the stronger dollar.
B
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When interest rates rise, the transactions demand for money usually
A) decreases. B) increases. C) decreases initially and then increases to the original position. D) does not change.
Ralph's Ski Shop is a local monopoly in a regional market. This type of situation can result from all of the following except:
a. small population relative to output needed for scale economies b. patent protection c. control of local zoning or limited operation permits d. long distance to alternative ski shops e. multiple products