The value of total output decreases when labor leaves one industry and goes to another and capital leaves the second industry and goes to the first. This indicates that
A) the first situation was not efficient.
B) the second situation is efficient.
C) price is greater than marginal cost.
D) it would be efficient to return to the first situation.
D
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How will the exchange rate (foreign currency per dollar) respond to an increase in the relative rate of productivity growth in the United States in the long run?
A) Exchange rates will rise. B) Exchange rates will be unaffected by changes in the relative rate of productivity growth in the United States, both in the short run and in the long run. C) The exchange rate will be affected in the short run, but not in the long run. D) Exchange rates will fall.
Which of the following is NOT an example of a financial derivative?
A) forwards B) bonds C) swaps D) futures E) options