Whenever a nation has substantial external debts and assets denominated in foreign currency:
A) it is easier to manage, since changes in value are often offsetting.
B) there can be large and destabilizing wealth effects.
C) its interest payments on the debt will be matched by interest earnings on the assets.
D) the risk of default becomes very large.
Answer: B) there can be large and destabilizing wealth effects.
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If you decide to go to a movie on a Friday night rather than write a letter to your grandmother, you
A) are willing to deprive your grandmother of a letter simply in order to enjoy a movie. B) place more value on the movie than on your grandmother. C) would rather have fun than fulfill your responsibilities to your relatives. D) none of the above.
The figure above shows the market for milk. The ________ price that producers must be offered to get them to produce 250 gallons of milk per day is ________
A) maximum; $3.25 B) minimum; $3.25 C) maximum; $2.50 D) minimum; $2.50