Research has shown that the inflation in a country is:
A) always high if there is a fixed exchange rate.
B) always low if there is a flexible exchange rate.
C) not dependent on the choice of exchange rate regime.
D) higher in developing countries coming out of hyperinflation.
Answer: C) not dependent on the choice of exchange rate regime.
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Which of the following is the best example of an "adverse selection" scenario (from a business perspective)?
A. An attorney engages in legally-risky tactics after discovering that a potential settlement is larger than was initially expected. B. An employee begins stealing from the company after being passed over for a promotion. C. A habitually reckless driver chooses not to buy auto insurance. D. A person who drinks and smokes heavily conceals this information before buying health insurance.
Suppose your manufacturing firm is not a price-taking seller (i.e., has some control over your product price) and sells machinery to U.S. (domestic) buyers as well as foreign buyers
The domestic demand for your product is inelastic but the foreign demand is elastic, and the machinery is bulky so that the high transport costs prevent resale among the buyers. You could charge both groups of buyers the same price for the machinery, but you know that you could increase total sales revenue by charging the domestic buyers a ________ price and charging the foreign customers a ________ price. A) higher, higher B) higher, lower C) lower, higher D) lower, lower